The IP data was so bad that Japan's Trade Ministry cut their output view for the first time since Sept. 2012. It seems the post-Tax Hike correction has far exceeded government and BOJ expectations by a large margin.
Looking at Japanese GDP it seems very likely Japan will be in recession...
In Europe demand for fixed income is high as several European nations saw multi-CE?NTURY low yields yesterday: Spain 2.47%, Holland 1.31%, Germany 1.12% and France 1.51%. German Bunds are below the previous July 2012 lows while the EU was in the midst of the Debt Crisis.
The US's ADP (jobs) came in disappointing with the 3rd miss out of the last 4 and down significantly from last months monster print, printing at 218k vs. consensus of 330k, down from June's 281k. ES stumbled a not on the release.
The biggie this morning was GDP, blowing consensus out of the water at a 4% print vs 3.1%. A surge in Inventories with Fixed Investments they added added +2.5% to the final print and Exports added 1.23% to the fixed print.
The Commerce Department estimated both Inventories and Trade as June data is incomplete, future revisions are likely to be to the downside. Today was also the BEA's annual revision from 1999 to Q1 2014 which brought the last GDP print of -2.9% to a more plalatable -2.1%.
As initially posted, the $USD (thus USD/JPY) jumped on the GDP print along with Index Futures, it looks like USD/JPY may be reaching its saturation point as the BOJ's line in the sand has been $102, there's a sharp current divergence in USD/JPY since GDP.
Bonds also (as noted earlier) dumped on the GDP data . Gold initially dumped, but then retraced a good portion of the post GDP decline before losing a good portion of that, lets just say choppy trade in gold right now.
Futures/Market Averages seem a little confused as to how to interpret the data as the GDP print gives the F_E_D much more leeway to move more aggressively on exiting accommodative policy and it seems that Index futures, after their initial knee jerk higher quickly realized this.
Other assets also moving...
As for today's F_E_D meeting, I have some personal curiosity whether the normal knee-jerk reaction which is often retraced will be there today. Consensus from the Street doesn't expect much from this F_O_M_C meeting as much of the data since the last meeting has been luke warm. Another $10 billion taper is expected with a final $15 bn finishing taper for October, but there's some talk Yellen may throw a cautionary hawkish comment in there which would not be surprising given all of the recent F_E_D speakers and her Humphrey Hawkins Congressional testimony in which she made some stock picks or sell ratings on Biotechs and Social Media, but also seemed to hint strongly at a faster pace of rate hikes.
Lets see what the early indications have to say.
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