February 8th, 2011 17:25:17 GMT

US DATA: EIA outlook: “EIA expects the price of WTI..


US DATA: EIA outlook: “EIA expects the price of WTI crude oil to
average about $93 per barrel in 2011, $14 higher than the average price
last year. For 2012, EIA projects that WTI prices will continue to
rise, averaging $98 per barrel. EIA’s forecast assumes U.S. real gross
domestic product (GDP) grows 3.0 percent in 2011 and 2.8 percent in
2012, while world real GDP (weighted by oil consumption) grows by 3.9
percent and 4.0 percent, respectively, in 2011 and 2012.” See


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February 8th, 2011 17:06:06 GMT

US Fiscal Debate To Be Shaped Hugely By Obama’s Feb 14 Budget


–Lawmakers Eager See If Admin Is Willing to Take On Entitlement Reform
–Budget Experts Expects Admin To Offer ‘Tactical Budget’
–Bipartisan Group of Senators Ponder Long-Term Deficit Cut Deal
–House GOP Seems More Intent In Cutting Parts of Discretionary Budget

By John Shaw

WASHINGTON (MNI) – While the prospects of a broad, bipartisan and
consequential long-term deficit reduction agreement this year have
always been remote, budget experts say they hinge crucially on whether
President Obama’s fiscal year 2012 budget signals a willingness to
tackle entitlement reform.

Obama will submit his fiscal year 2012 budget Monday, February 14.

Bob Bixby, executive director of the Concord Coalition, says that
the president signalled in his State of the Union address that he will
support the concept of deficit reduction but did not offer specific
plans to reform any of the key entitlements.

“Unfortunately, I think the president’s State of the Union speech
told us what we didn’t want to hear, that it’s still not the time to try
to tackle our fiscal problems,” he said.

“If he had anything dramatic in mind for the budget, I think Obama
would have hinted at it a few weeks ago. At this point probably the best
thing we could get out of the new budget is a call from the president
for some kind of bipartisan summit,” Bixby said.

Bill Frenzel, a former Republican congressman who is a guest
scholar at the Brookings Institution, agrees that Obama is not likely to
offer concrete plans for entitlement reform next week.

“I think this is going to be a normal, even a tactical budget. I’m
not expecting big things from it. About the only thing he can say that
would offer much hope is a call for some kind of bipartisan budget
negotiation,” he said.

“I wish I could say that I see momentum building for serious
bipartisan budget work. But I don’t. I see a lot more political
posturing and war dances ahead before we finally get down to serious
work,” Frenzel said.

A number of lawmakers have said that there will be no real effort
to cut the long-term deficit unless the president leads the charge.

“There is zero chance of entitlement reform if the president is not
for it. If he’s not in the game we might as well quit,” Sen. Jeff
Sessions, the ranking Republican on the Senate Budget Committee said
last week.

“I’m being practical about it,” he added.

Both Bixby and Frenzel said that the most encouraging development
on the fiscal horizon is the effort by Senate Budget Committee Chairman
Kent Conrad to craft a multi-year bipartisan budget agreement along the
lines of the recommendation of the Simpson-Bowles commission,

Conrad continues to say that it’s imperative for Congress’s budget
panels to develop a long-term fiscal plan and cites the Simpson-Bowles
plan as a model of a credible long-term deficit reduction plan.

“They got it about right,” he said, of the panel’s plan that
outlined nearly $4 trillion in 10 year deficit reduction.

Conrad has said a deficit reduction plan should be ready when a
debt limit “crunch” occurs on Capitol Hill in May.

Both Bixby and Frenzel they have been surprised at how tightly
focused House Budget Committee Chairman Paul Ryan is on securing $32
billion in spending cuts on the rest of the fiscal year 2011 budget
rather than working for a broader deficit reduction effort.

“Both what the White House is doing and what Ryan is doing seem to
be task avoidance strategies. They clearly don’t go to the heart of our
fiscal problem,” Bixby said.

** Market News International Washington Bureau: (202) 371-2121 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$]

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February 8th, 2011 17:00:22 GMT

Looking a little head and shoulderish


The price action of the last few days is beginning to look like an inverted head and shoulders on the hourly charts. If we can maintain gains above 1.3680/85, it looks as though we want to revisit last week’s highs, from a technical perspective. 1.3685 is also the 50% retracement of the 1.3862/1.3508 drop…

2-8 eur


February 8th, 2011 16:41:31 GMT

US coupon payments getting the blame for USD/JPY weakness


We hear this stuff a few times a year and it is usually blown way out of proportion by the media and analysts. There is a very large coupon payment to be made this month by the US government, on February 15. Somewhere in the range of $22.8 bln will be paid. Japanese investors hold a chunk of the debt.

The assumption is that those investors will repatriate every dime of interest earned. That’s very short-sighted, in my view. We tend to get all whipped up about this issue and it turns out to be a “damp squib” as Gerry would say. Lots of the interest will be reinvested, right here in the good ol’ US of A.

The story made the rounds this morning and shook out some of the sizable stable of longs waiting for higher US yields to finally give the dollar a boost versus the low-yielding JPY…


February 8th, 2011 16:29:50 GMT

Lacker: My sense core inflation has bottomed out


  • Significant risk of headline inflation rising on a sustained basis even as core remains tame
  • Would not pull plug on QE2 today but should be considered meeting by meeting
  • Unfair to blame Fed for rise in commodities prices
  • No reason Bernanke should not do press conferences

Meanwhile, back in the market, prices are chipping away at 1.3680 offers. Offers are scattered up to 1.3700 while stops are seen around 1.3685.

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February 8th, 2011 16:20:00 GMT

EUR/CHF brushes 1.3100


I guess we can blame the calming tensions in Egypt for the recent spike in EUR/CHF. The SNB must be very pleased no matter what the catalyst. Stops were triggered above the 1.3070 level this morning and we briefly pushed through 1.3100 to 1.3105.

We look set to close above a four-month old downtrend today which came in at 1.2977. But looming just overhead is resistance at 1.3119, the 50% retracement of the 1.3840/1.2398 decline.

2-8 eurchf

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