TradeTheNews.com Asian Market Update: Risk-aversion at a boil after Moody's cut

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(CL) CHILE CENTRAL BANK LEAVES OVERNIGHT RATE TARGET AT 5.00%, AS EXPECTED
- (CN) CHINA APR NEW HOME PRICES M/M: FELL IN 43 OF 70 CITIES V 46 PRIOR; Y/Y: FELL IN 46 OF 70 CITIES V 37 PRIOR >- (JP) JAPAN CABINET MAY MONTHLY ECONOMIC REPORT: UPGRADES ECONOMIC ASSESSMENT (First upgrade in 9 months)
- (KR) South Korea Mar Conference Board Leading Economic Index: -1.5% v +2.9% prior

***Markets Snapshot (as of 04:45GMT)***
- Nikkei225 -2.5%
- S&P/ASX -2.4%
- Kospi -2.6%
- Singapore Straits Times Index -1.6%
- Shanghai Composite -1.1%
- Hang Seng -2.6%
- Jun S&P Futures -0.2% at 1,298
- June gold -0.1% at $1,573/oz
- June Crude -0.6% at $92.01

***Overview/Top Headlines***
- Asian equity markets are sliding ever lower in the final trading session of the week, giving little reverence to the G8 summit taking place this weekend in Camp David. Regional indices are off by over 2% just about across the board, S&P500 futures have reversed initial gains to fall over 7 handles, while EUR, AUD, and NZD are all at fresh multi-month lows against the greenback. Govt bonds of US and Japan meanwhile are firmly bid, broadly benefiting USD and JPY currencies. In commodities space, front-month crude has also pared initial gains to fall over $1.00 below $92/brl, while copper retraced its run-up from $3.49 all the way down to $3.45.

- Continued selling has been attributed to more bad news from Europe, where Moody's cut the ratings of 16 Spanish banks by 1-3 notches. Top two banks - Santander and BBVA - bore the brunt of the action with a 3-notch downgrade to A-3, as the credit rating agency noted deteriorating asset quality and little expectation of improvement for the sovereign economy. In China, April home prices saw accelerated declines with 1.2% y/y slide in prices vs -0.7% drop in the prior month. Prices also fell m/m and y/y in 43 and 46 cities respectively out of 70 cities.

- Japan cabinet economic monthly report saw the defiant govt upgrade its economic assessment for the first time in 9 months on expectation of continued reconstruction-related demand. Exports and consumer spending were also upgraded, even as Japan remained mindful of Europe-related risks. Finance Min Azumi noted economic data suggests Japan is in good shape and Econ Min Furukawa saw prospects for sustained recovery. Tokyo officials also argued the recent strength in JGBs reflects market perception of the safety of the asset, just as 10-yr yields hit multi-year lows of 0.82%.

***Speakers/Geopolitical/In the press***
- (CN) According to gov't economist Zhu Baoliang, lending rates could be cut as soon as the current quarter (Q2), but rates could be left unchanged amid concerns about inflation - financial press >- (CN) China Q2 GDP estimated around 7.5% y/y; Inflation around 3.3% - Chinese press citing State Information Center
- (EU) Former ECB Pres Trichet: EMU needs more integration measures such as emergency federal powers to guard against significant risks in Europe - financial press
- (JP) Japan lawmakers continue to oppose entry into TPP free trade talks - Nikkei News
- JPM: Purchased European MBS and other debt securities over the past 3 years, building a position of as much as $100B - FT

***Equities***
- (AU) S&P/ASX extends decline below 4,070; Down over 2.2% and at lowest level in 2012
- TM: To expand capacity at 2 of 3 engine plants in N America; Total investment seen at about $110M - Nikkei News
- BIDU: To cooperate with Foxconn in a launch of cloud computing smartphones - Chinese press
- ACH: Received regulatory approval for a $1B IPO in Hong Kong - financial press

**US Equities**
- CRM: Reports Q1 $0.37 v $0.34e, R$695M v $678Me; +6.4% afterhours >- GPS: Reports Q1 $0.47 v $0.46e, R$3.49B v $3.5Be; +4.7% afterhours
- INTU: Reports Q3 $2.51 v $2.48e, R$1.95B v $2.0Be; -0.1% afterhours
- MRVL: Reports Q1 $0.23 v $0.20e, R$796M v $769Me; +3.0% afterhours
- AMAT: Reports Q2 $0.27 v $0.24e, R$2.54B v $2.4Be; -0.7% afterhours

***Fixed Income/Commodities/Forex***
- AUD/USD: Extending decline below $0.9870; 6-month lows
- NZD/USD: Extending decline to $0.76; 6-month lows
- EUR/USD: Extending decline below $1.2666; fresh 4-month low
- Japan 10-yr JGB yield falls to 9-year lows below 0.82%
- iShares Silver Trust ETF daily holdings rise to 9,619 tons from 9,516 tons (highest level since Apr 11th)
- SPDR Gold Trust ETF daily holdings rise by 2.1 tons to 1,278.7 tons (highest since Apr 27th)
- (MX) Mexico central bank gov Carstens: Mexico inflation is low and stable; Volatility in MXN does not change impact inflation or call for adjustment in monetary policy - financial press
- (US) Weekly Fed Balance Sheet Assets Week ending May 16th: $2.83T v $2.85T prior; M1: -$34B v -$4.0B prior; M2: -$1.7B v +$57.1B prior

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TradeTheNews.com European Market Update: Moody's outlook on financial institutions weighs upon risk appetite

 Thursday, February 16, 2012 5:48:34 AM

***Economic Data***
- (EU) ECB: €755M borrowed in overnight loan facility v €1.2B prior; €391.6B parked in deposit facility vs. €524.0B prior
- (RU) Russia Gold & Forex Reserve w/e Feb 10th: $509.1B v $507.3B prior
- (EU) Euro Zone Jan EU 25 New Car Registrations: -7.1% v -6.4% prior
- (CZ) Czech Jan CPI M/M: 1.8% v 1.4%e; Y/Y: 3.5% v 3.2%e
- (ES) Spain Q4 Final GDP Q/Q: -0.3% v -0.3% prelim; Y/Y: +0.3% v +0.3% prior
- (TR) Turkey Jan Consumer Confidence: 92.2 v 92.0 prior
- (SE) Sweden Central Bank (Riksbank) cut the Repo Rate by 25bps to 1.50%; as expected
- (NL) Netherlands Jan Unemployment Rate: 6.0% v 5.9%e
- (SE) Sweden Jan CPI Headline Rate M/M: -0.9% v -0.5%e; Y/Y: 1.9% v 2.3%e; CPI Level: 311.85 v 312.97e
- (SE) Sweden Jan CPI Underlying (CPIF) M/M:-0.7 v -0.5%e; Y/Y: 0.9% v 1.1%e
- (IT) Italy Dec Total Trade Balance: +€1.5B v -€1.6B prior; Trade Balance EU: -€577M v -€389M prior
- (NO) Norway Q4 GDP Q/Q:0.5% v 0.4%e; GDP Mainland Q/Q: 0.6% v 0.5%e
- (PL) Central/Eastern European Jan ZEW Indicator: -19.5 v -26.6 prior
- (IT) Italy Dec Current Account: +€402M v -€3.5B prior
- (BR) Brazil Dec Economic Activity Index M/M: 0.6% v 0.6%e; Y/Y: 1.5% v 1.6%e

Fixed Income >- (ES) Spain Debt Agency (Tesoro) sold total €4.07B vs. €3.0-4.0B indicated range in 2015 and 2019 Bonds
- Sold €733M in 4.4% Jan 2015 Bono; Avg Yield 2.966% v 4.984% prior; Bid-to-cover: 4.37x v 2.40x x prior; Maximum Yield set at 3.126% v 5.050% prior
- Sold €2.27B in 4.0% July 2015 Bono ; Avg Yield 3.332% v 2.861% prior; Bid-to-cover: 2.19x v 1.63x prior; Maximum Yield 3.470% v 2.989% prior
- Sold €1.07B in 4.30% Oct 2019 Bono; Avg Yield 4.832% v 5.352% prior; Bid-to-cover: 3.27x v 2.13x prior; max yield 4.899% v 5.371% prior
- (FR) France Debt Agency (AFT) sold approx €8.45B vs. €7-8.5B indicated range in 2014, 2015 and 2017 BTAN
- Sold €2.09B in 3.0% July 2014 BTAN; Avg Yield 0.89% v 1.05% prior; Bid-to-cover: 2.36x v 2.10x prior
- sold €1.335B in 2.5% Jan 2015 BTAN; avg yield 1.09% v 1.75% prior; Bid-to-cover: 3.30x v 2.07x prior
- Sold €5.02B in 1.75% Feb 2017 BTAN; avg yield 1.93%; Bid-to-cover: 1.99x (First tap of issue)
- (UK) DMO sold £1.75B in 4.5% Sept 2034 Gilts; avg yield 3.122% v 3.955% prior; Bid-to-cover: 1.62x v 2.23x prior; Tail 0.9bps v 0.3bps prior
- (HU) Hungary Debt Agency (AKK) sold HUF50B vs. HUF50B Targeted in 12-Month Bills; Avg Yield 7.69% v 7.85% prior; Bid-to-cover: 1.58x v 1.97x prior

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- China FDI declines for the third straight month
- Australia Jan Unemployment Rate better than expected
- Moody's warned it may cut the credit ratings of 17 global and 114 European financial institutions
- Greek drama continues to be played out with next Monday, Feb 20th as the next key date
- ECB Borrowing below the €1.0B level for the first time since Sept 2011
- Spanish government three-tranche bond auction was 'solid'

Equities: >FTSE 100 -0.70% at 5850, DAX -1.2% at 6680, CAC-40 -0.60% at 3369, IBEX-35 -2.5% at 8521, FTSE MIB -1.6% at 16,243, SMI -0.30% at 6182

- European equity indices opened the session lower, weighed down by corporate earnings and Moody's warning that it might downgrade more than 100 European banks.
- In individual movers, SocGen [GLE.FR] has declined by over 2% following earnings and amid broad weakness in European banks. Automaker Renault [RNO.FR] has gained more than 3% after reporting full year results. EDF [EDF.FR] is lower by over 3% following its earnings report. Also in France, insurer Axa[CS.FR] has lost over 3% following its earnings report. In Switzerland, Zurich Financial [ZURN.CH] is down over 1%, after reporting a weaker than expected Q4 net profit and a y/y decline in its return on equity. Nestle [NESN.CH] is higher by over 1% after reporting results and issuing 2012 guidance. UK-listed defense company, BAE Systems [BA.UK] is lower by over 2%, following the release of its full year results. Kingfisher [KGF.UK] is down by more than 1% after issuing its Q4 trading update. In Amsterdam, Akzo Nobel [AKZA.NL]has advanced over 5% following its Q4 results. Randstad Holding [RAND.NL] is down by more than 6% after reporting weaker than expected Q4 results.

Speakers: >- Greece PM Papademos said to be meeting with PASOK, ND officials today
- Greece Fin Min said to downplay escrow account demand as 'technical issue' and accept stepped-up loan oversight. No concerns over possible loan delay
- Swedish Central Bank commented after it cut the repo rate by 25bps that the country's economic slowdown had been more severe than expected with growth likely to be low in period ahead with rising unemployment. It noted that considerable uncertainty about economic developments abroad but that the Swedish economy to grow at more normal rate in 2013
- China Central Bank (PBoC) Vice Gov commented that it promised to prevent systemic and regional financial risks and carefully monitor risks in local banks and private lending market.
- China state researcher Fan Jianping commented that an interest rate cut by China was not very likely this year, not likely to cut RRR in Q1. He also noted that China might set its lowest growth target in eight years between 7.0-7.5%
- World Gold Council stated that 2011 Global gold demand was at 4,067.1 tons, +0.4% y/y and that the long term fundamentals remained strong on rising demand and tight supply. Global demand was valued at $205.5B compared to $159.5B in 2010 period and the value topped $200B for the first time ever. Strong investment demand drove 2011 with 1,640.7 tons, +5% y/y with China demand at 769.8 tons, +20% y/y. The WGC noted that Chine would likely to surpass India as the largest buyer in 2012
- EU Trade Commissioner de Gucht commented that Europe-China trade was becoming more balance and the trade gap was narrowing
- Hungary Central Bank Gov Simor: must pursue-market friendly economic policies to improve investor confidence to assure economic growth. He stressed that restoring investor trust was essential for Hungary to reduce its debt levels in the long-term. Government needed to act and encourage banks to boost their lending. Central banks must focus on primary mandate and secure a stable economic environment and that monetary easing might pose financial stability risk
- Hungary Central Bank members Gerhardt and Kocziszky (rate setters) commented that the central bank should hold rates steady until country reaches deal with EU/IMF on precautionary loan. The IMF agreement would strengthen the case for monetary policy easing and that the govt was clearly committed to EU/IMF deal
- Japan Econ Min Furukawa: Gov't thinking along the same lines as those of BoJ's regarding prices
- Iran's letter to EU official was said to have proposed early resumptions of nuclear discussions with leading nations

Currencies:
- The JPY was mixed against the major pairs. The USD/JPY hit a 3 month high. Dealers continue to note that the 78.30 remained pivotal support in the pair and the level held despite the drop in the EUR/JPY cross over the Greek debt concerns. The 78.30 level represented the upper end of a prior three-month trading range and should act as support. Interestingly dealers noted that FX intervention would be 'more effective' for the BOJ when the technical picture was favorable and more conducive for success. Above the 78.30 level would start to provide such a favorable environment with 80.30 being even more important level.
- The EUR/USD probed below the 1.30 handle with continued headwinds from the Greek situation. The recent spat of weakness started on Wednesday after press reports circulated that EU finance officials were said to be looking at proposals to delay all or part of the Greek bailout. During today's session Netherlands Fin Min de Jager reiterated the view that Greece had not met all the conditions (Greece says it did). Monday

Political/ In the Papers:
- The FT reported on the possible shifting sentiment towards a Greek default by some German, Dutch and Finnish officials. A senior euro zone government official was quoted as saying, 'It would have led to a credit crunch immediately and hurt us all; Now, the odds [of such a catastrophic impact] are something like 10-20%. It's still possible, but it's not a certainty'. The German Finance Minister Schaeuble hinted that Greece might postpone its elections and put in place a technocratic government free of all political parties to put in place the bailout program.
- The FT noted economists were split on whether or not the EU can survive a Greek default. Belgium think tank Bruegel's Wolff stated a default that was orderly and kept Greece inside the euro zone could prove manageable. But if Greece were to leave the euro, there could be serious contagion. In contrast, the Centre for European Policy Studies (CEPS) Gros said he has concerns that policymakers were persuaded into a false sense of security by ECB president Draghi's cheap loans.
- The Irish Debt Agency (NTMA), on its road show in Asia, is looking to return to the debt markets in late 2012, or early 2013. The agency reported that the road show so far has had positive response. In the past, NTMA officials have said that Ireland was fully funded through 2013. Also, the Irish Finance Minister Noonan said last December that he was hopeful the country would return to the bond market by mid-2013, and wanted the NTMA to step up issuance in the short-term market in H2 of 2012.
- Following yesterday's release of UK unemployment data, Sky News provided additional insight into the UK labour market. The unemployment count at 2.67M follows an increase of eight consecutive months. The number claiming Jobseeker's Allowance increased for the 11th straight months. It has been three years since unemployment exceeded the 2M mark. The Chartered Institute of Personnel and Development (CIPD) chief economist Philipott informed Sky News that while the figures for the last three months of 2011 were not as bad as expected, 2012 was going to be a tough year. He added, 'The problem for 2012 is that most analysts, including ourselves, expect the economy to grow very slowly at best and that will inevitably lead to rising unemployment'.

***Looking Ahead***
- (NL) Netherlands Debt Agency (DSTA) to sell $2.0B indicated in 1.0% 2017 bond via syndicate; Order book currently over $4.0B; guidance around 10bps over mid-swaps
- 6:00 (PT) Portugal Q4 Unemployment Rate: No est v 12.4% prior
- 6:00 (PL) Poland to sell Bonds
- 6:00 (FR) France Debt Agency (AFT) to sell €1.3-1.8B in Linkers
- 8:00 (PL) Poland Jan Employment: M/M: 1.0%e v -0.2% prior; Y/Y: 1.1%e v 2.3% prior
- 8:00 (PL) Poland Jan Avg Gross Wages M/M: -11.5%e v +9.0% prior; Y/Y: 4.8%e v 4.4% prior
- 8:00 (RO) Romania to sell Bonds
- 8:30 (CA) Canada Dec Int'l Securities Transactions: C$10.0Be v C$15.0B prior
- 8:30 (CA) Canada Dec Manufacturing Sales M/M: 2.0%e v 2.0% prior
- 8:30 (US) Jan Producer Price Index M/M: +0.4%e v -0.1% prior; PPI Ex Food & Energy M/M: 0.2%e v 0.3% prior >- 8:30 (US) Initial Jobless Claims: 365Ke v 358K prior; Continuing Claims: 3.49Me v 3.515M prior
- 8:30 (US) Jan Housing Starts: 675Ke v 657K prior; Building Permits: 680Ke v 671K prior (revised from 679K)
- 9:00 (MX) Mexico Q4 GDP Q/Q: 0.8%e v 1.3% prior; Y/Y: 3.7%e v 4.5% prior; 2011 Annual Growth Rate: 4.0%e v 5.45 prior
- 9:00 (MX) Mexico Dec Global Economic Indicator: 3.6%e v 3.8% prior
- 10:00 (US) Q4 Mortgage Delinquencies: No est v 7.99% prior; MBA Mortgage Foreclosures: no est v 4.43% prior
- 10:00 (US) Feb Philadelphia Fed: 9.0e v 7.3 prior
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 10:00 (US) Treasury Sec Geithner testifies on 2013 budget
- 10:00 (US) Fed's Kamin (non-voter)
- 11;00 (US) Treasury 2-year, 5-year and 7-year Note refunding announcement
- 11:00 (US) Fed to purchase $1.5-2.0B in Notes
- 12:00 (NO) Norway Central Bank (Norges) Gov Olsen's Annual Address >- 13:00 (US) Treasury to sell 30-Year TIPS
- 15:00 (US) Fed Chairman Bernanke on community banking
- 16:00 (CO) Colombia Dec Trade Balance: $100.0Me v $71.1M prior

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Timing of Moody’s Downgrade Sweep of Euro Members Surprises

 Late yesterday Moody’s Investor Service announced that they were cutting the debt ratings of several Eurozone countries, including most notably Italy, Portugal and Spain. Moody’s also said, citing the debt crisis, that it might also consider a downgrade to Austria, the U.K. and France. The Moody’s decision follows S&P’s downgrade earlier this year, so for the most part, traders were generally unsurprised by the announcement except for the timing, which analysts expect will have only little enduring impact on the Euro. Indeed, the EUR/USD is currently flirting with the opening price of 1.3168, and a bullish sentiment prevails on OpenBook.

On the OpenBook, quite a few traders of the EUR/USD pair seem to be content with scalping small returns. Over the past few hours OpenBook guru Gavinwright has closed out a string of long positions in the pair with gains ranging from 0.5% to 6% and holds several more open longs with the first target approaching. Guru pyruss is another who is waiting for a Euro recovery to hit break even on his long position which targets 1.3197, with several more longs behind it that would need a more sustainable rally. Likewise guru MPL1983 is sitting on two open longs already showing a profit. One OpenBook trader who held out for a higher gain was mcmkiama08 who closed a short position in the EUR/USD pair when it hit 1.3141, giving this trader a 64% return.

Later, Eurostat will be releasing December’s industrial production figures for the EMU and a consensus of analysts forecasts a year-over-year decline to -1.0% from the previous print of -0.3%. Also expected are the EMU and German ZEW surveys of economic sentiment for February, which analysts expect could show some improvement. The forecast is for the EMU survey to improve to -21.1 from -32.5 and the German survey to improve to -15.0 from -21.6.

 

Forex News - Euro slips as Moody's warns on France

SINGAPORE (Reuters) - The euro and sterling fell on Tuesday after rating agency Moody's warned it may cut its triple-A ratings of France, Britain and Austria while downgrading several euro zone countries, including Italy.
The euro dipped around 40 pips after the Moody's announcement to as low as $1.3145 at one point, and last stood at $1.3162, down 0.2 percent from late U.S. trade on Monday.
The sterling took a hit as Moody's became the first major rating agency to put a negative outlook on Britain's triple-A rating and fell 0.3 percent to $1.5727.
The Moody's decision on euro zone sovereign ratings follows a similar one by Standard & Poor's last month, when France and Austria lost their triple-A status while Italy, Spain, Portugal, Cyprus, Malta, Slovakia and Slovenia were downgraded.
Still, the announcement from Moody's may provide enough impetus for the euro to decline further in the near-term, said a trader for a European bank in Singapore.
"I think the euro will trade lower towards $1.3080," the trader said, adding that there could be a flush out of long euro positions taken recently by short-term speculators.
The single currency rose as high as around $1.3284 on Monday after Greece's parliament approved an austerity bill, bringing the country a step closer to securing a second EU/IMF bailout and soothing investor jitters about the possibility of a messy default.
Greece, however, still faces some hurdles before it can secure such aid.
The European Union has given the fragile ruling coalition of Prime Minister Lucas Papademos until Wednesday, when euro zone finance ministers are expected to meet, to specify how 325 million euros of the 3.3 billion euros demanded in budget savings will be achieved.
By the same deadline, Greek political leaders must give a written commitment to implement the terms of the deal.
While the situation in Greece is heading in the right direction, the euro is unlikely to make significant gains versus the dollar based on factors such as the economic outlook, said Koji Fukaya, chief currency analyst at Credit Suisse in Tokyo.
"I think it will be hard for the euro to test the upside and try for levels such as $1.34 or $1.35," Fukaya said, adding that
there was not much reason to expect the euro to rise aside from the potential for short-covering.
The dollar eased 0.1 percent versus the yen to 77.53 yen.
The yen may take cues from the Bank of Japan's policy decision due later on Tuesday. Pressure has been mounting on the BOJ to set a Fed-style explicit inflation target, and the central bank may respond on Tuesday by using stronger language to describe its commitment to beating deflation.
(Editing by Sugita Katyal)
© Thomson Reuters 2011. All rights reserved.
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Asian Market Update: Moody's EU sovereign rating action puts markets on the defensive; BoJ announces new easing to the tune of an additional 10T

- (JP) BANK OF JAPAN (BOJ) LEAVES TARGET RATE RANGE UNCHANGED BETWEEN 0.0% TO 0.10% AS EXPECTED; EXPANDS ASSET PURCHASE FUND BY ¥10.0T to ¥65.0T; SETS 1% INFLATION TARGET
- (JP) JAPAN DEC FINAL INDUSTRIAL PRODUCTION M/M: 3.8% V 4.0% PRELIM; Y/Y: -4.3% V -4.1% PRELIM; CAPACITY UTILIZATION M/M: 3.1% V -2.9% PRELIM
- (NZ) NEW ZEALAND JAN REINZ HOUSE PRICE INDEX M/M: -1.4% V -0.1% PRIOR; Y/Y: 25.2% V 20.9% PRIOR
- (AU) AUSTRALIA JAN NAB BUSINESS CONDITIONS: +2 V 0 PRIOR; CONFIDENCE: +4 V 3 PRIOR (7-month high)
- (UK) UK JAN RICS HOUSE PRICE BALANCE: -16% V -17%E
- (NZ) NEW ZEALAND JAN QV HOUSE PRICES Y/Y: 2.7% V 2.4% PRIOR (16-month high)
- (NZ) NEW ZEALAND JAN FOOD PRICES M/M: 0.0% V 0.2% PRIOR (3-month low)
- (CN) China Jan car sales -23.8% y/y v +26.7% prior
***Markets Snapshot (as of 05:30GMT)***
- Nikkei225 +0.5%
- S&P/ASX -0.9%
- Kospi -0.2%
- Taiwan Taiex -0.4%
- Singapore Straits Times -0.1%
- Shanghai Composite -0.7%
- Hang Seng -0.1%
- S&P Futures -0.3% at 1,345
- April gold -0.4% at $1,718/oz
- March Crude -0.3% at $100.57
***Overview/Top Headlines***
- A negative tone was set for the equities markets today by Moody's action after the US close and right before the open of Australia on European sovereign ratings. The Greenback gained against the other majors as well as emerging market currencies, A$ fell 0.4% to $1.0669 while the NZ$ tested $0.8290. Moody's affirmed the EFSF. Austria, France and the UK had their AAA ratings affirmed, outlooks were cut to negative. This is the first ratings agency action on the UK, which makes it particularly notable. Moody's cut Italy by 1 notch to A2, Spain by 2 notches to A3 and Portugal one notch to Ba3 all outlook negative. In Eastern Europe Slovakia and Slovenia were both cut one notch to A2 with a negative outlook. Main drivers for the ratings action were uncertainty over EU prospects for reforms and fiscal and economic framework as well as increasingly weak macroeconomic prospects all which constrains the creditworthiness of all EU sovereigns to a varying degree. The EUR/USD fell to $1.3146 though the range for the session was about 50 pips.
- Bank of Japan as expected left the target rate unchanged at 0.0-0.1%, they announced an unexpected expansion to their asset purchase program by ¥10.0T, bringing the total to ¥65.0T. The increase will be used for JGB buying, which is similar to October action. As Japanese press speculation the BoJ did set its first official inflation target of 1%. USD/JPY extended to a 2-week high above ¥77.80 before extending to session highs of ¥77.99. EUR/JPY tested above ¥102.60. BoJ action boosted the Nikkei225 to close at its highest level since Sept. The move also saw Hong Kong and Singapore creep into positive territory. In Australia BHP and Rio Tinto fell after announce a huge expansion in Escondida copper mine in Chile. Uranium miner Paladin had a wider y/y loss in H1 results despite strong production numbers.
***Speakers/Geopolitical/In the press***
- (US) Fed's Williams: Vital to keep monetary policy throttle wide open; Need to lower unemployment and return inflation to 2.0% quickly to minimize the damage to the economy >- (CN) China Banking Regulatory Commission (CBRC) may relax new capital adequacy requirements expected to take place in 2012 to ease the balance sheet pressure - Chinese press
- (CN) Former PBOC Deputy Gov: China will not boost loans and debt in order to cure economic issues - Shanghai Securities News
- (AU) RBA Assist Gov Debelle: Next LTRO plan may ease sovereign pressure; Market uncertainty to remain for some time
- (NZ) New Zealand Dep Fin Min Joyce: Strong NZ$ is presenting a challenge but exports continue to grow
***Equities***
- Tepco, 9501.JP: Govt is threatening to withhold ¥1.0T in aide unless Tepco allows itself to be nationalized - Japanese press
- DBS.SG: China unit to increase staff in China by 25% or 2,000 people in 2012
- BHP: Reports a major reserve increase of 17% at Escondida and increase in investment; approves $2.6B increase in Escondida investment - financial press
***US Equities***
- NSIT: Reports Q4 $0.78 (incl benefit) v $0.49e, R$1.36B v $1.4Be; +14.1% after hours
- USTR: Reports Q4 $0.64(adj) v $0.63e, R$1.20B v $1.2Be
- RAX: Reports Q4 $0.18 v $0.15e, R$283M v $281Me; names Karl Pichloer as new CFO; +6.9% after hours
- LPS: Reports Q4 $0.72 v $0.58e, R$534M v $518Me; -1.2% after hours
- FIS: Reports Q4 $0.66 (adj) v $0.65e, R$1.5B v $1.5Be; -0.6% after hours
***FX/Fixed Income/Commodities***
- (AU) Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES): Revises winter wheat forecast to 29.5M, +4.2% from Dec estimate and 5.7% y/y
- (CN) PBoC sells CNY6.0B of 28-day repos at 2.8%
- SLV: iShares Silver Trust ETF daily holdings fall to 9,658 tons from 9,700 tons (first decline since Jan 25th)
***Rating Action***
- (FR) MOODY'S CUTS FRANCE OUTLOOK TO NEGATIVE FROM STABLE; AFFIRMS AAA SOVEREIGN RATING
- (UK) MOODY'S: UNITED KINGDOM OUTLOOK CUT TO NEGATIVE FROM STABLE; AFFIRMS AAA SOVEREIGN RATING
- (IT) MOODY'S: ITALY SOVEREIGN RATING CUT ONE NOTCH TO A3 FROM A2, NEGATIVE OUTLOOK
- (AT) MOODY'S: CUTS AUSTRIA SORVEREIGN OUTLOOK TO NEGATIVE FROM STABLE; AFFIRMS AAA SOVEREIGN RATING
- (ES) MOODY'S: SPAIN SOVEREIGN RATING CUT TWO NOTCHES TO A3 FROM A1, NEGATIVE OUTLOOK
- (PT) MOODY'S: PORTUGAL SOVEREIGN RATING CUT ONE NOTCH TO BA3 FROM BA2, NEGATIVE OUTLOOK
- (EU) MOODY'S AFFIRMS AAA RATING FOR EUROPEAN FINANCIAL STABILITY FACILITY (EFSF); STABLE OUTLOOK
- (SL) MOODY'S: CUTS SLOVENIA SOVEREIGN RATING ONE NOTCH TO A2 FROM A1, NEGATIVE OUTLOOK
- (SO) MOODY'S: CUTS SLOVAKIA SOVEREIGN RATING ONE NOTCH TO A2 FROM A1, NEGATIVE OUTLOOK