TradeTheNews.com European Market Update: ISDA scheduled to meet to determine whether a Greek credit event occurred; Euro Zone Unemployment hits 15-year high

Thursday, March 01, 2012 5:43:19 AM

 TradeTheNews.com European Market Update: ISDA scheduled to meet to determine whether a Greek credit event occurred; Euro Zone Unemployment hits 15-year high

***Economic Data*** - (IN) India Trade Balance: -$14.8B v -$14.7Be; Exports Y/Y: 10.1% v 6.7% prior; Imports Y/Y: 20.3% v 19.8% prior
- (FR) France Q4 ILO Unemployment Rate: 9.8% v 9.7% prior; Mainland Unemployment Rate: 9.4 v 9.6%e; ILO Mainland Unemployment Change: +50K v +37K prior - (CH) Swiss Q4 GDP Q/Q: +0.1% v -0.1%e; Y/Y: 1.3% v 1.0%e
- (UK) Feb Nationwide House prices M/M: 0.6% v 0.2%e; Y/Y: 0.9% v 0.3%e
- (IE) Ireland Feb NCB Manufacturing: 49.7 v 48.3 prior
- (SE) Swedbank Feb PMI Survey: 50.3 v 51.4 prior
- (HU) Hungary Feb PMI: 50.5 v 49.8 prior
- (PL) Poland Feb Manufacturing PMI: 50.0 v 52.2 prior
- (TR) Turkey Feb Manufacturing PMI: 49.6 v 51.7 prior
- (DK) Denmark Jan Retail Sales M/M: 0.4% v 0.1%e; Y/Y: -2.6% v -1.2% prior
- (DK) Denmark Jan Unemployment Rate: 4.0% v 4.1%e; Gross Unemployment Rate: 6.0% v 6.2%e
- (HU) Hungary Jan Producer Prices M/M: +0.3% v -0.5% prior; Y/Y: 7.8% v 8.2%e
- (NO) Norway Feb PMI: 56.9 v 53.8e
- (ES) Spain Feb Manufacturing PMI: 45.0 v 45.1 prior (10th straight month of sub-50 reading)
- (PH) Philippines Central cut the Overnight Borrowing by 25bps to 4.00%; as expected
- (CZ) Czech Feb Manufacturing PMI: 50.5 v 48.8 prior (four month high)
- (HK) Hong Kong Jan Retail Sales Value Y/Y: 14.9% v 24.0%e; Retail Sales Volume Y/Y: 9.1% v 16.8%e
- (SE) Sweden Q4 Current Account (SEK): 50.1B v 76.1B prior
- (CH) Swiss Feb PMI Manufacturing: 50.5 v 48.5e
- (IT) Italy Feb PMI Manufacturing: 47.8 v 47.1e - (FR) France Feb Final PMI Manufacturing: 50.2 v 50.2e
- (DE) Germany Feb Final PMI Manufacturing: 50.2 v 50.1e (second monthly reading over 50)
- (EU) Euro Zone Feb Final PMI Manufacturing: v 49.0e
- (GR) Greece Feb PMI Manufacturing: 37.7 v 41.0 prior (record low)
- (IT) Italy Jan Preliminary Unemployment Rate: 9.2% v 9.0%e (highest since 2001)
- (NO) Norway Feb Unemployment Rate: 2.7% v 2.7%e
- (PL) Poland Q4 GDP Q/Q: 1.1% v 1.0% prior; Y/Y: 4.3% v 4.1%e
- (ZA) South Africa Feb Kagiso PMI: 57.9 v 52.3e
- (DE) Germany Jan Plant/Machinery Orders Y/Y: -6.0% v -10% prior - VDMA
- (UK) Feb PMI Manufacturing:51.2 v 52.0e
- (RU) Russia Gold & Forex Reserve w/e Feb Feb 24th: $509.6B v $504.4B prior
- (EU) Euro Zone Feb CPI Estimate Y/Y: 2.7% v 2.6%e - (EU) Euro Zone Jan Unemployment Rate: 10.7% v 10.4%e (15-year high)
- (BE) Belgium Jan Unemployment Rate: 7.4% v 7.2% prior
- (DK) Denmark Feb PMI Survey: 54.9 v 54.6 prior
- (IT) Italy Feb Preliminary CPI (NIC incl. tobacco) M/M: 0.4% v 0.2%e; Y/Y: 3.3% v 3.1%e
- (IT) Italy Feb Preliminary CPI EU Harmonized Y/Y: 3.4% v 3.4%e

Fixed Income: - (ES) Spain Debt Agency (Tesoro) sold €3.5-4.5B in 2014, 2015 and 2016 Bonds
- Sold €1.06B in 3.4% April 2014 Bono; Avg Yield 2.069% v 3.589% prior; Bid-to-cover: 2.81x v 1.8x prior; Maximum Yield 2.213% v 3.633% prior
- Sold €1.91B in 4.00% July 2015 Bono; Avg Yield 2.617% v 3.332% prior; Bid-to-cover: 2.37x v 2.19x prior; Maximum Yield 2.748% v 3.470% prior
- Sold €1.53B in 4.25% Oct 2016 Bono; Avg Yield 3.367% v 3.455% prior; Bid-to-cover: 2.59x v 3.57x prior; Max Yield 3.478% v 3.557% prior- (RU) Russia Gold & Forex Reserve w/e Feb Feb 24th: $509.6B v $504.4B prior
- (FR) France Debt Agency (AFT) sold total €7.99B vs. €7.0-8.0B indicated in 2017, 2019, 2022 and 2026 bonds
- Sold €825M in 4.25% Oct 2017 OAT; Avg Yield 1.91% v 2.42% prior; Bid-to-cover: 4.12x v 4.40x prior
- Sold €1.25B in 3.75% Oct 2019 OAT; Avg Yield 2.48% v 3.51% prior; Bid-to-cover: 2.74x v 2.09x prior
- Sold €3.91B in 3.00% April 2022 OAT; Avg Yield 2.91% v 3.13% prior; Bid-to-cover: 2.19x v 1.71x prior
- Sold €2.00B in 3.50% April 2026 OAT; Avg Yield 3.30% v 3.65% prior; Bid-to-cover: 2.17x v 3.24x prior
- (HU) Hungary Debt Agency (AKK) sold HUF60B in 12-Month Bills; Avg yield 7.46% v 7.69% prior; Bid-to-cover: x v 1.58x prior
- (UK) DMO sold £2.75B in 4.0% March 2022 Gilts; Avg Yield 2.181% v 2.210% prior; Bid-to-cover: 2.07x v 1.77x prior; Tail: 0.3bps v 0.4bps prior
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Fed Chairman Bernanke provides no hint of QE3; has a change again today to clarify hisviews
- Dealers note that ECB's 3-year LTRO constitute an easing of monetary conditions with €313B net add; ECB balance sheet now amounts to 32% of euro area GDP, compared with 21% in the UK, 19% in the US and 30% in Japan
- Italy 2-year Govt bond moves below 2.0% (first time since Oct 2010)
- European PMI Manufacturing data mixed
- Spain has completed almost 40% of gross 2012 issuance
- Euro Zone Jan Unemployment Rate surges to record EMU levels
Equities: FTSE 100 +0.50% at 5898, DAX +0.50% at 6888, CAC-40 +0.30% at 3463, IBEX-35 +0.40% at 8500, FTSE MIB +1.2% at 16,547, SMI +0.10% at 6117
-- European shares were higher during the session even after FOMC's minutes showed that the Fed was not planning a third round of QE. However, China and US PMI rose above expectations while jobless claims, expected during NY morning, are expected at a four-year low.
- In individual names, Vivendi [VIV.FR] which reported after the EU close last night, fell sharply after announcing that it sees no growth until 2014. Company guided Net profit for 2012 to be just above €2.5B but expects strong competition in France and Morocco to hurt its profitability in 2012 and 2013. Continental [CON.DE] reported below the estimates even though it guided its Q1 revenue to rise sequentially.
Speakers: - There were 2 questions said to have been asked to the ISDA about Greece's credit default swaps (CDS). The first question related to whether the use of a collective action clause (CAC) was a credit event. - The second question related to if the Greek debt swap represents a credit event. The ISDA meets today with a decision expected before Monday, March 5th
- ECB's Makuch reiterated the central bank view of not expecting another 3-year lending LTRO and that funds from second LTRO to go to non-financials
- Netherlands Bureau for Economic Policy Analysis (CPB) cuts 2012 and 2013 GDP outlook. It trimmed the 2012 GDP view to -0.75% from -0.50% prior Dec forecast and cuts its 2013 GDP view to 1.25% from 1.3% seen in Dec. The CPB also raised the deficit to GDP for the period putting the 2012 Deficit at 4.5% from 4.1% prior and the 2013 Deficit to GDP to 4.5% from 3.0% prior.
- Brazil said to have raised IOF tax on some currency operations to curb BRL strength (as speculated) - US financial press
- BOE Miles: Aggressive loosening of monetary policy might help economy and make it easier to normalize interest rates sooner. He noted that too much attention has been paid to the impact of QE on gilt yields while focus on corporate yields was more important. Low UK Govt bond yields were likely due to safe-haven flows. He reiterates the view that inflation would likely keep slowing
- Asia Development Bank (ADB) chief Kuroda commented that there could be a slowdown in Asia as the Euro crisis and high oil prices were a risk to the region's growth outlook
- Poland Central Bank Zielinska-Glebocka: Hard to determine if PLN currency gains would continue and added that Polish bond yields might stay lower due to confidence
- Ireland Dep PM Gilmore commented that he saw its citizens supporting the EU compact and that Ireland would not require ESM
- Hungary Central Bank released its lending survey which noted that tighter funding weakened bank lending. Household lending might pick up in early 2013 after mortgage scheme ends while corporate lending might pick up from end-2013
- Hungary PM Orban might reshuffle its gov't around end of April (earlier than expected) with Econ Min Matolcsy expected to remain with gov't
- Germany Chemical Assoc VCI guided its 2012 production flat and sales growth of 1.0%; producer prices +1.0% y/y
Currencies:
- US data and Fed Chairman Bernanke lack of signal more policy stimulus continued to aid the greenback during Asia today but entered into a consolidation mode during the European morning. The European currencies were off their morning lows and shock off a spat of mixed PMI manufacturing data and a surge in the Euro Zone unemployment data.
- The EUR/USD was trading around the 1.3340 leve and slightly positive from its Asian opening level. The current resistance was seen at the 1.3365 level, which was a former hourly support line earlier in the week.
- The JPY currency maintained its soft tone. The USD/JPY remained above the 81 handle with EUR/JPY cross hovering around the 108 level.
- The CHF was little changed despite better Q4 GDP data. The EUR/CHF cross seemed cemented at the .12050 area.
- The Brazilian Central Bank renewed its tactics to curb the strength of the BRL currency via the IOF tax.
Political/ In the Papers:
- Despite the ECB's three-year LTRO operations conducted yesterday, there has been only tepid demand for longer dated EU peripheral bonds. In terms of the Italian yield curve, the two-year yields have declined more than 10-year yields. The shape of the curve could mean that Italian bonds still have credit risks.
- The FT reported that the German Bundesbank continues to have concerns about the ECB's lending programs. In a letter to the ECB president, the head of the Bundesbank Weidmann raised concerns about the risks related to the ECB's lending measures.
- The Telegraph's Ambrose Evans-Pritchard made positive and negative remarks about the ECB's LTROs. While the operation has lowered the risks of a credit crunch, it has led to the EU's weakest banks in increasing their holdings of the sovereign debt of the weakest countries.
- Germany's Chancellor Merkel was said to have acknowledged international pressure related to the limit for the ESM. According to the German press, which cites government officials, the Chancellor could soften her opposition to increasing the limit of the ESM to €750B from €500B. It was said that both the ESM and EFSF could function simultaneously for about one year.
***Looking Ahead***
- (EU) EU Leaders Summit in Brussels
- (CZ) Czech Feb Budget Balance (CZK): No est v 21.0B prior
- (US) Feb ICSC Chain Store Sales Y/Y: No est v 4.8% prior
- (PE) Peru Feb Consumer Price Index M/M: 0.3%e v -0.1% prior; Y/Y: 4.2%e v 4.2% prior; Wholesale Prices M/M: No est v -0.5% prior
- (RU) Russia Feb Reserve Fund: No est v $61.4B prior; Wellbeing Fund: no est v $88.3B
- 6:00 (GR) Expected ISDA ruling if Greek sovereign credit event occurred
- 6:00 (PT) Portugal Jan Industrial Production M/M: No est v -1.5% prior; Y/Y: No est v -8.7% prior
- 6:00 (PT) Portugal Jan Retail Sales M/M: No est v 2.3% prior; Y/Y: No est v -10.3% prior
- 6:00 (ZA) South Africa Jan Electricity Consumption Y/Y: No est v 1.1% prior; Electricity Production Y/Y: No est v 0.4% prior
- 6:00 (CZ) Czech Republic to sell CZK9.0B in 9-month Bills
- 7:00 (EU) EU Conservative Leaders hold Pre-Summit Meeting
- 7:00 (IE) Ireland Feb Consumer Confidence: No est v 56.6 prior
- 8:00 (US) Fed's Pianalto
- 8:00 (BR) Brazil Feb PMI Manufacturing: No est v 50.6 prior
- 8:00 (US) Mar RBC Consumer Outlook Index: No est v 45.1 prior
- 8:00 (RO) Romania to sell Bonds
- 8:30 (EU) Poland Fin Min Rostowski speaks at Brussels Think
- 8:30 (CA) Canada Q4 Current Account (BOP): -$9.6Be v -$12.1B prior
- 8:30 (CA) Canada Jan Industrial Product Price M/M: +0.3%e v -0.7% prior; Raw Materials Price Index M/M: +0.5%e v -2.4% prior
- 8:30 (US) Jan Personal Income: 0.4%e v 0.5% prior; Personal Spending: 0.4%e v 0.0% prior - 8:30 (US) Jan PCE Core M/M: 0.2%e v 0.2% prior; Y/Y: 1.9%e v 1.8% prior; PCE Deflator Y/Y: 2.3%e v 2.4% prior
- 8:30 (US) Initial Jobless Claims: 355Ke v 351K prior; Continuing Claims: 3.415Me v 3.392M prior
- 10:00 (US) Fed Chairman Bernanke delivers semi-annual monetary policy report
- 10:00 (US) Jan Construction Spending M/M: 1.0%e v 1.5% prior
- 10:00 (US) Feb ISM Manufacturing: 54.5e v 54.1 prior; Prices Paid: 58.0e v 55.5 prior
- 10:00 (MX) Mexico Central Bank Economist Survey
- 10:00 (MX) Mexico Jan Remittances: $1.5Be v $1.8B prior
- 10:30 (US) Fed's Raskin
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:00 (IC) Iceland Q4 Current Account (ISK): No est v 12B prior
- 12:00 (FR) France Socialist Candidate Hollande to hold Meeting in Lyon
- 12:00 (IT) Italy Feb New Car Registrations Y/Y: No est v -16.9% prior
- 12:30 (US) Fed's Lockhart speaks on Economy and Banking in Atlanta
- 13:00 (MX) Mexico Feb IMEF Manufacturing Index: 53.0e v 51.8 prior; Non-Manufacturing Index: 52.9e v 51.7 prior
- 13:00 (BR) Brazil Feb Trade Balance: $2.3Be v -$12.9B prior
- 13:00 (IT) Italy Feb Budget Balance: No est v -€3.3Be; Budget Balance YTD: no est v -€3.3B prior
- 15:30 (MX) Mexico Jan YTD Budget Balance (MXN): No est v -355.5B prior
- 17:00 (US) Feb Total Vehicle Sales: 14.00Me v 14.13M prior; Domestic Vehicle Sales: 11.00Me v 11.05M prior
- 18:30 (JN) Japan Jan Unemployment Rate: 4.5%e v 4.6% prior
- 18:30 (JN) Japan Jan National CPI: -0.1%e v -0.1% prior
- 23:30 (US) Fed's Williams speaks in Honolulu, HI
- (US) Republican Georgia Primary Event

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