Tuesday, May 15, 2012 5:53:18 AM European Market Update: Greece said to make €430M bond payment today; European GDP data and German ZEW Survey were mixed in session***Economic Data***
- (JP) Japan Apr Consumer Confidence: 40.0 v 40.8e
- (SG) Singapore Mar Retail Sales M/M: 1.6% v 0.2%e; Y/Y: 9.1% v 7.2%e; Retail Sales Ex Auto Y/Y: 6.5% v 3.5%e
- (FR) France Apr Consumer Price Index M/M: 0.1% v 0.2%e; Y/Y: 2.1% v 2.2%e; CPI Ex Tobacco Index: 124.80 v 124.84e
- (FR) France Apr CPI EU Harmonized M/M: 0.2% v 0.2%e; Y/Y: 2.4% v 2.5%e
- (FR) France Q1 Preliminary Gross Domestic Product Q/Q: 0.0% v 0.0%e; Y/Y: 0.3% v 0.5%e
- (FI) Finland Mar GDP Indicator: 2.4% v 3.5% prior
- (DE) Germany Q1 Preliminary GDP Q/Q: 0.5% v 0.1%e; Y/Y: 1.7% v 0.9%e; GDP wda Y/Y: 1.2% v 0.8%e
- (FR) France Q1 Preliminary Non-Farm Payrolls Q/Q: +0.1 v -0.2%e; Wages Q/Q: 0.9% v 0.7%e
- (AT) Austria Q1 GDP Q/Q: 0.2 v 0.0% prior; Y/Y: 1.9 v 0.8% prior >- (CZ) Czech Q1 Preliminary GDP Q/Q: -1.0% v +0.1%e; Y/Y: -1.0% v +0.2%e
- (HU) Hungary Q1 Preliminary GDP Q/Q: -0.7% v -0.5%e; Y/Y: -1.3% v -0.1%e
- (HU) Hungary Mar Final Industrial Production M/M: 0.6% v 0.6% prelim; Y/Y: 0.6% v 0.6% prelim
- (TR) Turkey Feb Unemployment Rate: 10.4% v 10.2% prior
- (FI) Finland Mar Current Account: -€40M v -€230M prior
- (DK) Denmark Apr Wholesale Prices M/M: 0.2 v 0.8% prior; Y/Y: 2.2% v 2.7% prior
- (NL) Netherlands Q1 Preliminary GDP Q/Q: -0.2% v -0.3%e; Y/Y: -1.1% v -1.1%e
- (NL) Netherlands Mar Trade Balance: €4.1B v €2.9B prior
- (SE) Sweden Q1 Total Number of Employees Y/Y: 2.3% v 2.8%e
- (TR) Turkey Apr Budget Balance (TRY) 1.4B v 1.1B y/y
- (IT) Italy Q1 Preliminary GDP Q/Q: -0.8% v -0.7%e; Y/Y: -1.3% v -1.2%e
- (NO) Norway Apr Trade Balance (SEK): 38.4B v 46.4B prior
- (UK) Mar Visible Trade Balance: -£8.6B v -£8.4Be; Total Trade Balance: -£2.7B v -£2.9Be; Trade Balance Non EU: -£4.1B v -£4.7Be >- (GR) Greece Q1 Advanced GDP Q/Q: %; Y/Y: -6.2% v -7.5% prior
- (EU) Euro Zone Q1 Advanced GDP Q/Q: 0.0% v -0.2%e; Y/Y: 0.0% v -0.2%e
- (DE) Germany May Zew Economic Sentiment: 10.8 v v 19.0e; Current Situation: 44.1 v 39.0e
- (EU) Euro Zone May ZEW Economic Sentiment: -2.4 v +13.1 prior
- (PT) Portugal Q1 Preliminary GDP Q/Q: -0.1%% v -1.0%e; Y/Y: -2.2% v -3.1%e
Fixed Income: >- (GR) Greece Debt Agency (PDMA) sold €1.3B v €1.0B in 13-week Bills; avg yield 4.34% v 4.20% prior; Bid-to-cover: 2.32x v 2.46x prior
- (SE) Sweden sold SEK2.5B vs. SEK2.5B indicated in 3.5% 2022 Bonds; avg yield 1.4696%
- (ZA) South Africa sold total ZAR2.1B vs. ZAR2.1B indicated in 2018, 2026 and 2041 bonds
- (EU) ECB allotted €43.0B vs. €39.0Be in 7-Day Main Refinancing Tender at fixed 1.0%
- (HU) Hungary Debt Agency (AKK) sold HUF45B in 3-Month Bills; Avg Yield 7.16% v 7.16% prior; Bid-to-cover: 2.02x v 2.40x
- (UK) DMO sold £2.75B in 5% 2025 Gilts; Avg Yield 2.251% v 2.356% prior; Bid-to-cover: 2.09x v 1.8x prior; Tail 0.2bps vs. 0.4bps prior
- (BE) Belgium Debt Agency sold total 3.39B vs. €3.0-3.5B in 3-month and 12-month Bills
- Sold €1.465B in 3-month Bills; Avg yield 0.201% v 0.179% prior; Bid-to-cover: 3.97x v 2.62x prior
- Sold €1.925B in 12-month Bills; Avg yield 0.627% v 0.734%prior; Bid-to-cover: 2.36x v 2.32x prior
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Moodys cuts Italian banking sector (as expected)
- RBA minutes: Need to cut rates tp offset higher bank rates; CPI has slowed
- Greece will make bond payment of €430M today
- German, Eurozone & Portugal GDP beats expectations; Italy, emerging Europe do not
- Greek President Papoulias will attempt to persuade leaders to accept a technocratic government to avert another round of elections
- Hollande inaugurated as France's new President
***Equities*** >FTSE 100 +0.10% at 5469, DAX +0.20% at 6462, CAC-40 +0.40% at 3071, IBEX 35 -0.40% at 6783, FTSE MIB -0.30% at 13,622, SMI +0.10% at 5882
- European equity indices opened the session slightly higher, following the losses seen on Monday's session. Additionally, banks opened higher, but are currently trading in negative territory, as peripheral government bond yields have moved higher. The better than expected Q1 GDP data out of Germany has been offset by disappointing growth figures out of Italy and mixed German ZEW data. Additionally, concerns related to Greece's political situation and Spanish banks have continued to linger. In Greece, the Athens Stock Exchange has risen by more than 0.50%, while Greece's 10 yr bond yield has risen by over 10bps on the session amid reports that Greece will make the €430M debt payment, which is due today.
- UK-listed Smiths Group [SMIN.UK], Babcock International [BAB.UK], Afren [AFR.UK] and G4S [GFS.UK] are all trading higher following the release of their respective financial reports. Shares of Germany's largest steel maker, Thyssenkrupp [TKA.DE] have declined by over 2% on the session, as the company reported weaker than expected quarterly revenues. Merck KGAA [MRK.DE] and Air Berlin are also trading lower after their respective Q1 earnings reports. In other German movers, Phoenix Solar [PS4.DE] has gained over 9% following its quarterly earnings release, while Sky Deutschland [SKYD.DE] is higher by over 5% as the company reported better than expected quarterly revenues.
In France, shares of Iliad [ILD.FR] are higher by over 4%, as the company's Q1 sales beat analyst expectations. Additionally, Vivendi [VIV.FR] has gained more than 3% on better than expected Q1 results. Swiss private bank Julius Baer is lower by more than 2%, as the company said its year to date gross margin was below the level seen in 2011. Italian banks opened the session mostly higher, despite the decision by Moody's to downgrade 26 Italian banks. Italian banking name Intesa [ISP.IT] is due to report its quarterly earnings later today.
Speakers: >- Greece will pay holdouts €430M of a Euro bond maturing today
- France President Hollande commented in his acceptance sppech that he vowed to open a new path for Europe and that France had always overcome challenges
- Head of Greek Independent party Kammenos denied having sent document to president's office with proposals for forming a government
- ZEW Economists commented that political uncertainty in Greece and France contributed to the drop in its May Survey and that economic risks had risen in recent weeks. Growth and consolidation did not contradict each other and that austerity must be pursued in some European countries. There was the expectation of small banking crisis during the next 6 months, as sectorally everything was quite well, except for the banking sector. The ZEW noted that the exchange rate expectations was for Euro to weaken as expectation of the Euro Zone crisis would intensify again
- EU's Juncker commented that the topic of a new Eurogroup chief was not on today's agenda. He reiterated that he was confident Spain to reach 2013 deficit target
- France Fin Min Baroin stated that the French banking sector could absorb Greek losses
- UK Chancellor Osborne commented that the Euro Region must stand behind its currency. Uncertainty was undermining Euro Area economies and that strengthening the banking sector was part of the solution
- Spain Fin Min De Guindos commented that Spain asked for ECB role in auditing banking sector. He noted that EFSF aid for banking sector was not discussed
- German CDU official Altmaier stated that it was certain that Germany and France would agree on a common euro crisis approach by the end of June at the latest. He reiterates that expected the fiscal compact to be approved by the German Parliament before the summer recess
- German SPD (opposition) stated that Chancellor Merkel policies were leading Europe into recession and called for investment and fiscal pact
- German SDP's Steinmeier (opposition) doubted that the ESM and fiscal compact would be ratified before summer recess. Party would need to decide whether it backed the fiscal pact depending on what growth measures are added. He expected Chancellor Merkel to accept an EU growth pact
- Slovakia gov't won a confidence vote on its austerity program, as expected
- India Junior Oil Min commented that India to import 15.5M tons of crude oil from Iran in FY13 compared to 17.4M tons y/y
- Norway Govt revised its 2012 budget with the overall surplus revised higher to NOK381B vs. NOK346B seen in Oct . Structural non-oil deficit was raised to to NOK116B vs. NOK112.2B seen in Oct and the non-oil Defciit to GDP to 3.5% vs. 3.9% prior. Norway cut it 2012 non-oil GDP growth to 2.7% from 3.1% prior Oct view and lowered 2012 Core CPI to 1.4% from 1.8% seen in Oct. It noted that the budget was somewhat more expansive compared to October budget
- IMF commented on Sweden and noted that various financial fragilities were apparent in the country that included household debt and a softening housing market
- Sweden Central Bank's Wickman-Parak: Reasonable to assume that the Euro crisis will be solved
- South Africa Central Bank (SARB) approved provision of liquidity facility to help banks meet Basel III requirements
- Singapore Dep PM commented that the Euro Zone debt crisis escalation might have substantially spilled over into global markets and could not rule out a deeper recession in Europe and more market stress as a result
- (IR) Iran envoy: Discussions with IAEA have been constructive
Currencies: -
- The early part of the session exhibited some consolidation of recent moves in markets, including currencies. A stronger German Q1 GDP helped to contain some of the risk aversion coupled with word that Greece would make the €430M bond payment today. However, as other Euro Area members reported their respective GDP highlighted the two-tier growth and some of the earlier euphoria faded. German ZEW investor confidence was weaker than expected and provided another headwind for any prolong Euro rebound. As the NY morning approached the EUR/USD was steady at 1.2845, about 20 pips higher from it Far East open. The market will now focus on key US economic data and EcoFin meeting.
Political/ In the Papers:
- The Trades Union Congress (TUC) reported that due to the inability to find full-time work the number of part-time workers more than doubled over the past four years. Approximately 600K men were working part-time in December while looking for full-time positions compared to 293K at the end of 2007. In addition, total in involuntary part-time work hit 1.4M (highest reading since records began in 1992).
***Looking Ahead***
- (PT) Bank of Portugal releases 2011 Annual Report
- (IT) EU's Barroso to meet Italy PM Monti
- 6:00 (EU) EFSF to sell €1.0B in 2.0% 2017 Notes
- (PE) Peru Mar Economic Activity Index Y/Y: No est v 7.2% prior
- (PE) Peru Apr Unemployment: No est v 8.7% prior
- 6:00 (EU) EU Officials Hold Meeting With Ukraine's Foreign Minister
- 6:00 (PT) Portugal Q1 Labour Costs: No est v -1.7% prior
- 7:00 (DE) German Chancellor Merkel
- 7:00 (EU) ECB; to drain €214.0B to offset govt bond purchases
- 7:30 (US) Weekly ICSC Chain Store Sales
- 7:45 (EU) EU Finance Ministers (Ecofin) press conference
- 8:00 (IC) Iceland Apr Unemployment Rate: No est v 7.1% prior
- 8:00 (PL) Poland Apr CPI M/M: 0.5%e v 0.5% prior; Y/Y: 3.9%e v 3.9% prior
- 8:30 (US) Apr Consumer Price Index M/M: 0.0%e v 0.3% prior; Y/Y: 2.3%e v 2.7% prior
- 8:30 (US) Apr CPI Ex Food & Energy M/M: 0.2%e v 0.2% prior; Y/Y: 2.3%e v 2.3% prior
- 8:30 (US) Apr Consumer Price Index NSA: 229.9000e v 229.392; CPI Core Index SA: No est v 228.432 prior >- 8:30 (US) May Empire Manufacturing: 9.50e v 6.56 prior
- 8:30 (US) Apr Advance Retail Sales: 0.2%e v 0.8% prior; Sales Less Autos: 0.2%e v 0.8% prior; Retail Sales Ex Auto & Gas: 0.3%e v 0.7% prior
- 8:55 (US) Weekly Redbook Retail Sales
- 9:00 (US) Tsy Sec Geithner
- 9:00 (BE) Belgium Mar Trade Balance: No est v -€152.3M prior
- 9:00 (US) Mar Total Net TIC Flows: $32.5Be v $107.7B prior; Net Long-term TIC Flows: No est v $10.1B prior
- 9:00 (PL) Poland Apr YTD Budget Level (PLN): No est v -23.0B prior; Budget Performance YTD: No est v 65.6% prior
- 9:00 (EU) ECB Forex data
- 9:30 (US) Fed's Duke
- 10:00 (US) Mar Business Inventories: 0.4%e v 0.6% prior
- 10:00 (MX) Mexico weekly International Reserves
- 10:00 (US) May NAHB Housing Market Index: 26e v 25 prior
- 11:00 (US) Fed to sell $8.00-8.75B in Notes
- 11:30 (US) Treasury to sell $30B in 4-Week Bills
- 11:30 (IS) Israel Apr Consumer Prices M/M: 0.8%e v 0.4% prior; Y/Y: 2.1%e v 1.9% prior
- 12:30 (FR) German Chancellor Merkel to meet France President Hollande
- 14:30 (EU) EU's Rehn Speaks at Dinner Event in Brussels
- 16:30 (US) Weekly API Energy Inventories
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