Equity Markets – the only equity markets not in the red this morning are those that are closed for the day.  US futures have bounced off of their earlier lows but still indicate a lower opening following the March jobs report on Friday which disappointed versus expectations for private non-farm payroll growth.  News out of China that inflation accelerated in March versus expectations, especially in foodstuffs, has many concerned that additional monetary stimulus from the PBoC is likely off the table for another month as officials there continue to monitor the economic numbers with an eye toward fighting inflation first.  These slowing macro concerns in turn heighten the market’s sensitivity to any negative news coming out of the EMU especially with regard to Spain or Italy and given the move higher in equity indices since the beginning of the year (S&P 500 +11.17%, +11.5% in the Russell 1000)) it may not take much to alter the mentality in the market and get a correction started.

Macro, News & Events

Economic Releases – there are no releases today

Events

1030 -  IIF press conference in Washington on the IMF spring meetings

1915 – Fed Chairman Bernanke will address the 2012 Financial Markets Conference hosted by the Federal Reserve Bank of Atlanta at Stone Mountain, GA.  The theme of the three-day conference is financial reform.

·         Insurance premiums for FHA-backed loans will increase for new buyers and decline for those who are refinancing.  Fees for new buyers will rise to 1.75% of the loan’s balance (from 1%) and beginning on June 11^th the refinancing premium will decline to 0.99% from 1% if the original loan was funded prior to mid-2009.

Asia & Europe – markets in Europe are closed again today for the Easter holidays

·         Inflation in China was higher than forecast in March as consumer prices rose 3.6% year over year, outpacing the consensus estimate of 3.4%.  Food related inflation was 7.5% for the month.  This raises new concerns that the PBoC has little room to engage in additional monetary easing for fear of sending inflation even higher.

·         578 companies in the Shanghai Composite have reported earnings for 2011 to date with the average result has missing estimates by 1.7%.  The underperformance in earnings has damped demand for corporate paper and sent spreads to their widest levels since the end of the year.

·         Sony will trim its workforce by 6% following its 4^th straight annual loss…1/2 the cuts will come from business reorganizations

·         The current account balance for Japan swung to a surplus in February following the record deficit in January, raising pressure on export markets there and counterbalancing the BoJ’s attempts to weaken the yen in order to improve conditions for Japanese exporters.

·         Kansai Electric will spend $2.5 billion over 4 years to bolster the defenses of its 11 nuclear reactors against natural disasters.  At the present time, all 11 reactors are in “cold shutdown” following the Fukushima disaster last March.  The company is petitioning to allow 2 reactors to re-start after they passed new regulatory stress tests as the country prepares for summer weather and the potential forced outages at times of peak demand.

·         Markets in Seoul were lower today as concerns about the planned missile launch by the DPRK heightens tensions on the peninsula.  The launch, originally scheduled for today has now been set for sometime between the 12^th and 16^th of the month.  The DPRK may follow up the missile launch with an underground test of a nuclear device.

·         The Australian government is planning for a budget surplus in fiscal 2012/2013 indicating that economic stimulus may be off the table for the time being as the government attempts to execute a balancing act between the relatively strong commodity sectors and the weaker housing and consumer markets.

·         Large trades on the JPMorgan credit derivatives desk in London have come under scrutiny as US regulators continue their debate of the so-called “Volcker Rule”…while the bank maintains that the trades are designed to hedge cash exposure on the bank’s balance sheet others claim that the activity more closely resembles proprietary trading.

·         Italy and Spain will likely compete for the same investor dollars as yields begin to rise again in the EMU “periphery” as concerns about Spain’s economic situation grow and the impact of the LTRO program fades.

·         ABC reported over the weekend that according to unnamed Spanish officials the country has the ability to increase the VAT in order to raise revenues to reduce budgetary shortfalls…the VAT in Spain is below the average in the EMU

·         Greece faces a potential seamen’s strike scheduled for tomorrow and Wednesday…Greek PM Papademos has said that the government is prepared to take all steps necessary to prevent the walkout

·         The violence in Syria continues only one-day before the UN special envoy Annan’s brokered cease fire is supposed to take effect.  At this point the “agreement” appears in doubt as government forces refuse to pull-back from populated areas without additional commitments from the rebels…at present, the UN has no “plan B”

Credit Markets – European markets are closed today for the Easter Holidays

High Yield issuance in April

Energy Markets – crude oil is lower in early trading as concerns about economic growth rates and renewed negotiations with Iran on its nuclear program. 

Futures – crude and natural gas futures are both lower but the natural gas futures curve has flattened more leading to the energy equivalence ratio widening to  6.29x.