TradeTheNews.com European market update: place the euro-zone finance ministers meet to decide, they were willing to accept the conditions of a Greek restructuring.

Monday, January 23, 2012 5:37:20 AM
  ***Economic Data***
- (EU) ECB: €3.3B borrowed in overnight loan facility v €3.0B prior; €491.8B parked in deposit facility vs. €420.9B prior
- (FR) France Jan Business Confidence: 91 v 95e; Production Outlook: -37 v -36e; Own-Company Production Outlook: -6 v -2 prior
- (DK) Denmark Jan Consumer Confidence: -7.0 v -7.0%r
- (CH) Swiss Dec M3 Money Supply Y/Y: 7.7% v 7.3% prior
- (CH) Swiss Q4 Real Estate Index Family Homes: 404.6 v 398.6 prior
- (IC) Iceland Dec Wage Index M/M: 0.3% v 0.3% prior; Y/Y: 9.2 v 9.0% prior

Fixed Income:
- (NO) Norway sold NOK6.0B vs. NOK6.0B indicated in in 4.25% 2017 Bonds; Yield 1.90%
- (SK) Slovakia Debt Agency (ARDAL) sold €305.2M in Zero Coupon April 2014 bonds; Yield 3.0469%; Bid-to-cover: 1.74x
- (DE) Germany sold €2.54B in 12-Month BuBills; avg yield 0.0700% v 0.3460% prior; Bid-to-cover: 2.2x v 4.3x prior
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Euro Zone Fin Mins to meet later today to decide what terms of a Greek restructuring they are willing to accept
- IIF Chief Dalara: Banks have made 'maximum offer' in Greek debt talks
- EU ambassadors said to have agreed to impose Iran oil embargo
Equities:
FTSE 100 +0.10% at 5708, DAX +0.10% at 6358, CAC-40 +0.70% at 3288, IBEX-35 +0.50% at 8463, FTSE MIB +0.60% at 15,367, SMI +0.30% at 6133
- European equity indices opened the session mostly lower and are currently trading mixed, amid the lower government bond yields being seen in most European markets. Overall equity markets continue to focus on the talks related to private sector involvement (PSI) in the bailout of Greece. So far on the session, Italy's FTSE MIB has outperformed on gains in the banking sector, while the DAX has underperformed amid losses in shares of Bayer. European banks are mostly higher, despite the rise being seen in the Markit iTraxx Financial index, which is implying higher credit risk on the session for financials. Outperformers in the banking sector include SocGen [GLE.FR], Commerzbank and Unicredit.
- In individual movers in the UK, Ocado Group [OCDO.UK] has declined by over 5% after announcing the resignation of its CFO. Thomas Cook [TCG.UK] is lower by more than 3% on concerns about the company's early Jan bookings. Small-cap name Immunodiagnostic Systems [IDH.UK] is down over 10% as the company disclosed a profit warning. Optos [OPTS.UK] is higher by over 2% following the release of its Q1 sales report, while Hunting [HTG.UK] has gained over 3%, after saying that its trading since mid Nov has exceeded its expectations. In Germany, shares of Bayer [BAYN.DE] have lagged the overall DAX, while Continental AG [CON.DE] is lower on speculation that the company may seek to raise capital. ThyssenKrupp [TKA.DE] is little changed, following reports that the firm could seek to merge its stainless steel unit with Outokumpu [OUT1V.FI]. German banking machine manufacturer, Wincor Nixdorf [WIN.DE], has gained over 3%, after reporting its Q1 results. European banks are mostly higher as the talks between Greece and its private sector creditors continue. Also, the FT reported that Germany and France might lobby to have certain Basel III capital rules eased in a move to support economic growth.
Speakers:
- Bank of Spain (BOS) commented in its monthly economic review that the Spanish economy would take a hit from a "significant" drop in government and household spending, partially due to strict austerity policies, only offset to some extent by a positive contribution from foreign demand.. The central bank now Q4 GDP Q/Q: -0.3% v 0.0% prior quarter and Y/Y: +0.3% v +0.8% prior quarter. Overall the BOS forecasted 2012 GDP -1.5%
- EU ambassadors were said to have agreed to impose Iran oil embargo with the grace period to end on 1st Jul (as expected) and to review the embargo by May 1st. The EU to make a specific statement on Greece over embargo
- EU was said to be near deal on ESM voting procedure with the proposal to set aside ESM cap to cover loan risk to address Finland's concerns as it could cut ESM capacity
- Hungary PM's Chief of Staff Varga commented that the country would proposed 'flexible' solutions to EU objections on its central bank law and that the planned Jan 24th meeting between PM Orban and EU's Barroso was 'important'. He noted that he would be surprised if EU/IMF objected to flat tax and that reports on €17-20B loan were not far from reality
- EU's Barnier commented that the Financial Transaction Tax (Tobin Tax) was feasible and the Vickers reforms was compatible to EU rules. Single market needed a single rule book
And that there was no plot to undermine the City of London
- France Debt Agency (AFT) Chief Mills commented that central banks, emerging sovereign funds purchased French debt at auctions held last week. He noted that about 33% of France's debt was held by those in France, 33% by EU holders and 33% by non-European holders.
- ECB has removed 3.2K debt instruments from a list of assets against which it would lend with instruments included certain types of bank debt, as these instruments might not meet the central banks' requirements. The move was unlikely to present liquidity problems for banks, as the ECB eased requirements at the start of Jan and added more than 10K new instruments.
Currencies:
- The Euro entered the session on a cautious note as the Euro Zone Fin Mins were set to meet later today to decide what terms of a Greek restructuring they were willing to accept. Negotiating a debt swap with Greece creditors made their 'maximum' offer, leaving it to the EU and the IMF to decide whether to accept the deal. The question remained whether Greece would apply a collective action clause, which can force creditors into a write-off. Nonetheless dealers noted that the net Euro short positions hit its fourth consecutive weekly high and helped the EUR/USD recoup its initial losses exhibited during the Asian session. The pair stayed above the 1.29 hendle throughout the European morning.
Political/ In the Papers:
- It was revealed in the Sunday Telegraph that more than 218K jobseekers were taken off Jobseeker's Allowance, categorized as attending courses and then classed as officially "employed". The Employment Minister Grayling stated that he will correct the 'disgraceful' practice. According to a source in the Jobcentre, the courses are generally 'completely useless' and usually did not assist in employment; as they tend only help in reducing the unemployment figures.
- Telegraph's Ambrose Evans-Pritchard said Italy and Spain are pushing for more action from the ECB, as their economies are headed towards double dip recessions. The Foreign Minister Garcia-Margallo said the ECB should do quantitative easing (QE), and suggested that the European Investment Bank be used to support the debt crisis. The recommendation by ECB President Draghi to give the unused reserves from the EFSF to the ESM could face opposition in Germany's Bundestag.
- The UK think-tank Resolution Foundation sees millions of families unlikely to see earnings return to pre-recession levels until at least 2020, while the income of the wealthy continue to increase over the same period. The disparity in future spending power is due to the incomes of the lower middle class seen to rise more slowly than the rich, and decreased spending power decreased by petrol and food costs. The middle also have to deal with prolonged wage squeeze with real wages declining by 4.2% y/y, and warned that the most significant cuts to tax credits have yet to come in affect.
***Looking Ahead***
- (RU) Russia Dec Producer Prices M/M: 0.8%e v 1.6% prior; Y/Y: 15.4%e v 15.7% prior
- 6:00 (TU) Turkey to sell 9% 2016 Bonds
- 6:00 (TU) Turkey to sell Inflation Linked 2021 Bonds
- 6:00 (IS) Israel to sell 2014, 2016, and 2022 Bonds
- 6:00 (IS) Israel to sell2014 and 2022 Inflation Linked Bonds
- 6:45 (GE) German Chancellor Merkel hosts Belgian PM Di Rupo for Berlin Talks
- 8:00 (RO) Romania to sell 6-month bills
- 8:15 (IT) EU's Tajani speaks at event in Milan
- 8:30 (CA) Canada Dec Leading Indicators M/M: No est v 0.8% prior
- 9:00 (FR) France to sell up to €8.3B in 3-month, 6-month and 12-month Bills
- 9:30 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
- 9:30 (EU) ECB announces weekly settlements in its Govt Bond Purchase Program (SMP)
- 9:45 (UK) BOE to buy £1.7B in 2015-2021 Gilts in reverse auction
- 10:00 (EU) Euro Zone Jan Advanced Consumer Confidence: -21.4e v -21.1 prieo
- 10:30 (IS) Israel Central Bank Interest Rate Decision: Expected to leave the Base Rate unchanged at 2.75%
- 11:00 (EU) Euro Area Finance Ministers meet in Brussels
- 11:00 (US) Fed to purchase $1.5-2.0B in Notes
- 11:30 (US) Treasury to sell $29B in 3-Month and $27B in 6-Month Bills
- 12:00 (EU) EU, Macedonian Officials hold meeting in Brussels
- 12:00 (DE) German Chancellor Merkel gives speech in Berlin on 10 Years of the Euro
- 12;30 (DE) German Chancellor Merkel meets with EU President Van Rompuy and Barroso
- 13:00 (UK) Bank of England member Posen speaks in Nottingham
- 14:00 (AR) Argentina Dec Trade Balance: $475Me v $684M prior
- 18:00 (HU) EU's Barroso, meets Hungary PM Orban in Brussels
- (JP) BOJ Interest Rate Decision: Expected to leave the Target Rate Range unchanged from 0.0-0.10%
Legal disclaimer and risk disclosure
All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.