Peanuts! Beer here! Greek debt here! On the heels of yesterday’s Greek deficit plan and with Germany implicitly joining the list of rich uncle rescuers that include the US government (aka, the US taxpayer), Abu Dhabi, the IMF, and all other countries that helped their banking system, Greece will try sell up to 5b euros of 10 yr notes at a spread of about 300 bps to the mid swap rate, down from the 350 spread priced in the sale of 5 yr notes they sold last month. The issue is well oversubscribed. They need to refinance up to 23b euros of maturing debt coming in the Apr/May time frame. Greek stocks are rising to a one month high in response but the euro is lower as a sell on the news. The BoE and ECB kept policy on cruise control.
In his press conference, ECB Pres Trichet sounded measured in his comments and didn’t seem much worried about the economic situation in Europe, re: Greece. He welcomes Greece’s deficit cutting plan and said its “absurd” they would leave the EU. He is confident inflation is going to stay low in the medium term and thus monetary policy is currently appropriate. The ECB will continue to phase out gradually and timely their policy initiatives. On the economy he said the outlook was broadly balanced and the recovery was on track, though uneven. He tightened his ’10 GDP estimate for the euro zone to .4-1.2% from .1-1.5% and moved the ’11 estimate to a range of .5-2.5% from .2-2.2%. While the shorts have piled on the euro, the ECB doesn’t have the printing press that the Fed and the UK have. Stable money (price stability) is the ECB’s sole focus so while the European situation is messy, their currency is more money good than others.
Initial Jobless Claims totaled 469k which is about in line with expectations and down from last week’s spike to 498k. Because of the bad snow storms and disruption that resulted in the data, its best to average these weeks in order to get a better handle on the trend. The 4 week average is now 471k vs 474k last week but above 470k for a 2nd straight week for only the first time since late Nov/early Dec. Continuing Claims fell by 134k and were 100k below expectations but Extended Benefits rose by a net 197k. Thus, there is still very little evidence in this weekly, timely data, of any big pickup in hiring outside of some modest improvement. Tomorrow’s Feb Payroll figure will also be impacted by the weather.