TradeTheNews.com European market update: IMF $1.0 t of the next G20 Summit to propose increase financing resources.

 Wednesday, January 18, 2012 5:52:21 AM
 ***Economic Data***
- (EU) ECB: €2.3B borrowed in overnight loan facility vs. €1.6B prior; parked in deposit facility (fresh record highs) vs. €501.9B prior
- (ZA) South Africa Dec CPI (all items) M/M: 0.3%e v 0.3% prior; Y/Y: 6.3% v 6.1% prior
- (MA) Malaysia Dec CPI Y/Y: 3.0% v 3.1%e
- (IT) Italy Nov Total Trade Balance: -€1.6B v -€1.1B prior; Trade Balance EU: -€386M v -€195M prior
- (ZA) South Africa Dec Kagiso PMI: 49.451.6e
- (ES) Spain banks November bad loans ratio 7.51% vs. 7.42% prior month
- (UK) Dec Jobless Claims Change: +1.2K v +7.0Ke; Claimant Count Rate: 5.0% v 5.0%e
- (UK) Nov Average Weekly Earnings 3M/Y: 1.9% v 2.0%e; Weekly Earnings ex-Bonus 3M/Y: 1.9% v 1.9%e
- (UK) Nov ILO Unemployment Rate: 8.4% v 8.3%e
- (EU) Euro Zone Nov Construction Output M/M: +0.8% v -1.4% prior; Y/Y: +0.2% v -2.5% prior
- (CH) Swiss Jan Credit Suisse ZEW Expectations Survey: -50.1 v -72 prior
- (IE) Ireland Nov Trade Balance: €4.3BNo est v €3.7B prior
- (ZA) South Africa Nov Retail Sales M/M: -0.3% v 0.5%e; Y/Y: 6.8% v 7.5%e
Fixed Income
- (RU) Russia sold RUB18.6B vs. RUB20.0B indicated in 2015 OFZ Bond; Yield 7.67%; Bid-to-cover: 2.4x
- (SE) Sweden sold SEK9.8B vs. SEK10.0B indicated in 3-month Bills; Yield 1.575%
- (EU) ECB allotted $5.9B in 7-Day USD Liquidity operation at fixed 0.59% vs. $5.7B prior
- (DE) Germany sold €3.44B in 0.25% Dec 2013 Schatz; Avg Yield 0.17% v 0.29% prior; Bid-to-cover: 2.2x v 1.4x prior
- (PL) Portugal Debt Agency (IGCP) sells €2.5B vs. €2.2-2.5B indicated range in 3-Month and 6-Month and 11-month Bills
- Sold €496M in 3-month Bills; Avg Yield 4.346% v 4.346% prior; Bid-to-cover: 4.1x v 2.40 prior
- Sold €754M in 6-month Bills; Avg Yield 4.740% v 5.250% prior; Bid-to-cover: 3.0x v 4.1x prior
- Sold €1.25B in 11-month Bills; Avg Yield 4.986%; Bid-to-cover: 2.1x - 6:00 (IE) Ireland Nov Trade Balance: € v €3.7B prior
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- World Bank lowers 2012 and 2013 global growth forecasts
- Goldman's O'Neill: JPY currency is probably 25% overvalued
- China begins 10-day Lunar New Year holiday break
- UK Jobless claims comes in slightly better than expectations
Equities:
FTSE 100 flat at 5695, DAX +0.50% at 6364, CAC-40 +0.50% at 3287, IBEX-35 flat at 8536, FTSE MIB +0.40% at 15,395, SMI +0.25% at 6071
- European shares traded cautiously albeit in positive territory following bleaker outlook from the World Bank. The latter cut its growth outlook for 2012 and 2013 warning against weaker developing country growth and EU crisis. The somber updated overshadowed more positive news regarding Greece whose government is closing talks with creditors and will resume talks with the Institute of International Finance in Athens today.
- In notable individual names, Commerzbank [CBK.GE] traded lower after Moody's placed its A2 ratings under review for a possible downgrade. ASML [ASML.NL] rallied after beating expectations and providing a robust outlook for 2012.
Speakers:
- IMF said to propose increasing lending resources by $1.0T and push for resource plan by the Feb G20 meeting
- Fitch director Settepani commented that a two-notch Italy sovereign downgrade was possible and that the decision to be based upon financing levels
- Fitch Sovereign Director Parker commented that he was encouraged by steps taken by Italy's PM Monti but country must enact fiscal, structural reforms. He noted that Italy was not an peripheral economy and was absolutely critical for Euro zone future
- German Econ Ministry updated its economic outlook which confirmed a cut in the 2012 GDP view to 0.7% from 1.0% prior. Germany set its official 2013 GDP growth outlook at +1.6%- German Econ Min Roesler commented that Govt to release proposal to limit solar subsidies
- France President Sarkozy commented that a major slowdown in France was seen from Q4 2011; Sees 2011 GDP should reach 1.7%
- ECB's Noyer commented that Euro zone would return to growth and added that the pressure on French banks were difficult to understand.
- Hungary IMF representative Fellegi: stated that he did discuss the country's central bank law with ECB's Draghi
- ECB Kranjec commented: Slovenia needed new government quickly and that could
not exclude that Slovenia would find itself in a similar situation like Hungary if sovereign ratings continued to fall without control
- EFSF Official commented that S&P downgrade would not impact leveraging plans (refutes press speculation)
- Russia Dep PM Shuvalov stated that he expected no decision on EU aid to IMF prior to the country's March presidential vote
- Poland Fin Min Rostowski commented that he saw the possibility of a sovereign upgrade for country during 2012 and noted the deficit to GDP to come in 'slightly below' the 3.0% level. He stated that indebted Euro members needed structural reforms and that the role of rating agencies must be changed
- Japan Fin Min Azumi commented that it was difficult for Japan to intervene in the forex markets like Switzerland did, hard to draw a line in fx rates
- Goldman Sach's O'Neill commented that the JPY currency was probably 25% overvalued. He also stated that Japan's days of trade and current account surpluses 'looked to be finished'
- IEA cut its 2012 Global Oil demand forecast by 200Kbpd to 90.0Mbpd with demand growth seen at 1.1M bpd. Maintained its 2012 Non-Opec Supply forecast at 53.7M bpd and stated that Dec OPEC Crude production was at 30.89Mbpd, highest reading in 3 years. IEA saw rising likelihood of sharp 2012 economic slowdown. Slowing oil demand outpacing decline in economic growth with one-third decline in GDP growth would mean flat oil demand for 2012
Currencies:
- The USD began the European session on softer footing but contained in recent ranges for the bulk of the morjing. The EUR/USD made another attempt to breech the 1.28 handle early probing the hourly downtrend line over the last three weeks. However comments from a senior director at Fitch who warned that a two-notch downgrade of Italy was an option. The Fitch comment and lingering concerns of the upcoming Portugal bill auction today and negotiations on Greek debt provided the excuse to curb Euro upside momentum. Risk appetite again found some footing after financial press report circulated that the IMF was prepared to propose increasing lending resources by $1.0T and push for resource plan by Feb G20 meeting. The EUR/USD entered the NY morning above the 1.28 level and above the former Jan downtrend line.
Political/ In the Papers:
- The Spanish Budget Minister Montoro said that the government will provide credit lines and other liquidity measures to the Spanish regions in need. It will use the state supported Official Credit Institute (ICO) to assist with various regions to settle bills, and allow regions more time to make payments. The government is finding ways to deal with legislation, which bans direct bailouts of the 17 regions, following the Spain missing its 2011 budget target. The Spanish regions control more than one third of the country's public spending. Note that several Spanish regions are shut out of public-debt markets.
- The Telegraph's Evans-Pritchard looked at the remaining options for Hungary. It is faced with the choice of meeting the EU's demands so that it can receive IMF funding or allow the country to default. The country's bond yields are trading at unsustainable levels at a time when the country needs to repay €5.9 billion in EU-IMF loans and raise external funding equal to 18% of GDP in 2012.
- The FT reported that credit default swaps (CDS) are pricing in a 65% chance that Portugal will default over the next five years. Portugal's bond prices have moved to levels which some investors see as default territory. Portugal's bonds are being impacted by contagion concerns related to Greece. With regards to today's Portuguese debt auctions, most investors expect the country to comfortably sell its debt, as the country's banks are expected to bid at the auction so they can use the debt to receive ECB funding. Portugal has a €10 billion bond repayment due in June.
***Looking Ahead***
- (BR) Brazil Central Bank (COPOM) Interest Rate Decision: Expected to cut the SELIC Target by 50bps to 10.50%
- (IS) Israel Dec Leading 'S' Indicator M/M: No est v 0.2% prior
- 6:00 (CZ) Czech Republic to sell up to CZK9.0B in new Floating Rate Bonds
- 6:15 (IE) Ireland Fin Min Noonan gives speech and holds panel discussion
- 7:00 (US) MBA Mortgage Applications w/e Jan 13th: No est v 4.5% prior
- 7:00 (EU) EU Barroso with Denmark PM Thorning-Schmidt
- 7:45 (US) ICSC Chain Store Sales
- 8:00 (PL) Poland Dec Employment M/M: -0.1%e v +0.1% prior; Y/Y: 2.4%e v 2.5% prior
- 8:00 (PL) Poland Dec Avg Gross Wages M/M: 9.3%e v 1.8% prior; Y/Y: 4.4%e v 4.4% prior
- 8:30 (US) Dec Producer Price Index M/M: 0.1%e v 0.3% prior; PPI Ex Food & Energy M/M: 0.1%e v 0.1% prior
- 8:55 (US) Redbook Retail Sales
- 9:00 (US) Nov Total Net TIC Flows: $50.0Bev -$48.8B prior; Net Long-term TIC Flows: $40.0Be v $4.8B prior
- 9:15 (US) Dec Industrial Production: +0.5%e v -0.2% prior; Capacity Utilization: 78.1%e v 77.8% prior
- 9:30 (US) Fed's Tarullo to testify on Volcker Rule
- 9:30 (BR) Brazil Central Bank Currency Flow Data.
- 9:45 (UK) BOE to buy £1.7B in 2022-2036 Gilts in reverse auction
- 10:00 (US) Jan NAHB Housing Market Index: 22e v 21 prior
- 10:30 (CA) Bank of Canada Monetary Policy Report
- 11:00 (US) Fed to buy $8.0-8.75B in Notes
- 11:30 (US) Treasury to sell 4-Week Bills
- 13:30 (DE) ECB member Weidmann
- 16:30 (US) API Weekly Energy Inventories
- (CN) EU Barnier continues official visit to Beijing, China
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.

European Market Update: IMF set to again propose increasing lending resources by $1.0T by the next G20 Summit

Wednesday, January 18, 2012 5:52:21 AM
 TradeTheNews.com European Market Update: IMF set to again propose increasing lending resources by $1.0T by the next G20 Summit
***Economic Data***
- (EU) ECB: €2.3B borrowed in overnight loan facility vs. €1.6B prior; parked in deposit facility (fresh record highs) vs. €501.9B prior
- (ZA) South Africa Dec CPI (all items) M/M: 0.3%e v 0.3% prior; Y/Y: 6.3% v 6.1% prior
- (MA) Malaysia Dec CPI Y/Y: 3.0% v 3.1%e
- (IT) Italy Nov Total Trade Balance: -€1.6B v -€1.1B prior; Trade Balance EU: -€386M v -€195M prior
- (ZA) South Africa Dec Kagiso PMI: 49.451.6e
- (ES) Spain banks November bad loans ratio 7.51% vs. 7.42% prior month
- (UK) Dec Jobless Claims Change: +1.2K v +7.0Ke; Claimant Count Rate: 5.0% v 5.0%e
- (UK) Nov Average Weekly Earnings 3M/Y: 1.9% v 2.0%e; Weekly Earnings ex-Bonus 3M/Y: 1.9% v 1.9%e
- (UK) Nov ILO Unemployment Rate: 8.4% v 8.3%e
- (EU) Euro Zone Nov Construction Output M/M: +0.8% v -1.4% prior; Y/Y: +0.2% v -2.5% prior
- (CH) Swiss Jan Credit Suisse ZEW Expectations Survey: -50.1 v -72 prior
- (IE) Ireland Nov Trade Balance: €4.3BNo est v €3.7B prior
- (ZA) South Africa Nov Retail Sales M/M: -0.3% v 0.5%e; Y/Y: 6.8% v 7.5%e

Fixed Income
- (RU) Russia sold RUB18.6B vs. RUB20.0B indicated in 2015 OFZ Bond; Yield 7.67%; Bid-to-cover: 2.4x
- (SE) Sweden sold SEK9.8B vs. SEK10.0B indicated in 3-month Bills; Yield 1.575%
- (EU) ECB allotted $5.9B in 7-Day USD Liquidity operation at fixed 0.59% vs. $5.7B prior
- (DE) Germany sold €3.44B in 0.25% Dec 2013 Schatz; Avg Yield 0.17% v 0.29% prior; Bid-to-cover: 2.2x v 1.4x prior
- (PL) Portugal Debt Agency (IGCP) sells €2.5B vs. €2.2-2.5B indicated range in 3-Month and 6-Month and 11-month Bills
- Sold €496M in 3-month Bills; Avg Yield 4.346% v 4.346% prior; Bid-to-cover: 4.1x v 2.40 prior
- Sold €754M in 6-month Bills; Avg Yield 4.740% v 5.250% prior; Bid-to-cover: 3.0x v 4.1x prior
- Sold €1.25B in 11-month Bills; Avg Yield 4.986%; Bid-to-cover: 2.1x - 6:00 (IE) Ireland Nov Trade Balance: € v €3.7B prior

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- World Bank lowers 2012 and 2013 global growth forecasts
- Goldman's O'Neill: JPY currency is probably 25% overvalued
- China begins 10-day Lunar New Year holiday break
- UK Jobless claims comes in slightly better than expectations
Equities:
FTSE 100 flat at 5695, DAX +0.50% at 6364, CAC-40 +0.50% at 3287, IBEX-35 flat at 8536, FTSE MIB +0.40% at 15,395, SMI +0.25% at 6071
- European shares traded cautiously albeit in positive territory following bleaker outlook from the World Bank. The latter cut its growth outlook for 2012 and 2013 warning against weaker developing country growth and EU crisis. The somber updated overshadowed more positive news regarding Greece whose government is closing talks with creditors and will resume talks with the Institute of International Finance in Athens today.
- In notable individual names, Commerzbank [CBK.GE] traded lower after Moody's placed its A2 ratings under review for a possible downgrade. ASML [ASML.NL] rallied after beating expectations and providing a robust outlook for 2012.
Speakers:
- IMF said to propose increasing lending resources by $1.0T and push for resource plan by the Feb G20 meeting
- Fitch director Settepani commented that a two-notch Italy sovereign downgrade was possible and that the decision to be based upon financing levels
- Fitch Sovereign Director Parker commented that he was encouraged by steps taken by Italy's PM Monti but country must enact fiscal, structural reforms. He noted that Italy was not an peripheral economy and was absolutely critical for Euro zone future
- German Econ Ministry updated its economic outlook which confirmed a cut in the 2012 GDP view to 0.7% from 1.0% prior. Germany set its official 2013 GDP growth outlook at +1.6%- German Econ Min Roesler commented that Govt to release proposal to limit solar subsidies
- France President Sarkozy commented that a major slowdown in France was seen from Q4 2011; Sees 2011 GDP should reach 1.7%
- ECB's Noyer commented that Euro zone would return to growth and added that the pressure on French banks were difficult to understand.
- Hungary IMF representative Fellegi: stated that he did discuss the country's central bank law with ECB's Draghi
- ECB Kranjec commented: Slovenia needed new government quickly and that could
not exclude that Slovenia would find itself in a similar situation like Hungary if sovereign ratings continued to fall without control
- EFSF Official commented that S&P downgrade would not impact leveraging plans (refutes press speculation)
- Russia Dep PM Shuvalov stated that he expected no decision on EU aid to IMF prior to the country's March presidential vote
- Poland Fin Min Rostowski commented that he saw the possibility of a sovereign upgrade for country during 2012 and noted the deficit to GDP to come in 'slightly below' the 3.0% level. He stated that indebted Euro members needed structural reforms and that the role of rating agencies must be changed
- Japan Fin Min Azumi commented that it was difficult for Japan to intervene in the forex markets like Switzerland did, hard to draw a line in fx rates
- Goldman Sach's O'Neill commented that the JPY currency was probably 25% overvalued. He also stated that Japan's days of trade and current account surpluses 'looked to be finished'
- IEA cut its 2012 Global Oil demand forecast by 200Kbpd to 90.0Mbpd with demand growth seen at 1.1M bpd. Maintained its 2012 Non-Opec Supply forecast at 53.7M bpd and stated that Dec OPEC Crude production was at 30.89Mbpd, highest reading in 3 years. IEA saw rising likelihood of sharp 2012 economic slowdown. Slowing oil demand outpacing decline in economic growth with one-third decline in GDP growth would mean flat oil demand for 2012
Currencies:
- The USD began the European session on softer footing but contained in recent ranges for the bulk of the morjing. The EUR/USD made another attempt to breech the 1.28 handle early probing the hourly downtrend line over the last three weeks. However comments from a senior director at Fitch who warned that a two-notch downgrade of Italy was an option. The Fitch comment and lingering concerns of the upcoming Portugal bill auction today and negotiations on Greek debt provided the excuse to curb Euro upside momentum. Risk appetite again found some footing after financial press report circulated that the IMF was prepared to propose increasing lending resources by $1.0T and push for resource plan by Feb G20 meeting. The EUR/USD entered the NY morning above the 1.28 level and above the former Jan downtrend line.
Political/ In the Papers:
- The Spanish Budget Minister Montoro said that the government will provide credit lines and other liquidity measures to the Spanish regions in need. It will use the state supported Official Credit Institute (ICO) to assist with various regions to settle bills, and allow regions more time to make payments. The government is finding ways to deal with legislation, which bans direct bailouts of the 17 regions, following the Spain missing its 2011 budget target. The Spanish regions control more than one third of the country's public spending. Note that several Spanish regions are shut out of public-debt markets.
- The Telegraph's Evans-Pritchard looked at the remaining options for Hungary. It is faced with the choice of meeting the EU's demands so that it can receive IMF funding or allow the country to default. The country's bond yields are trading at unsustainable levels at a time when the country needs to repay €5.9 billion in EU-IMF loans and raise external funding equal to 18% of GDP in 2012.
- The FT reported that credit default swaps (CDS) are pricing in a 65% chance that Portugal will default over the next five years. Portugal's bond prices have moved to levels which some investors see as default territory. Portugal's bonds are being impacted by contagion concerns related to Greece. With regards to today's Portuguese debt auctions, most investors expect the country to comfortably sell its debt, as the country's banks are expected to bid at the auction so they can use the debt to receive ECB funding. Portugal has a €10 billion bond repayment due in June.
***Looking Ahead***
- (BR) Brazil Central Bank (COPOM) Interest Rate Decision: Expected to cut the SELIC Target by 50bps to 10.50%
- (IS) Israel Dec Leading 'S' Indicator M/M: No est v 0.2% prior
- 6:00 (CZ) Czech Republic to sell up to CZK9.0B in new Floating Rate Bonds
- 6:15 (IE) Ireland Fin Min Noonan gives speech and holds panel discussion
- 7:00 (US) MBA Mortgage Applications w/e Jan 13th: No est v 4.5% prior
- 7:00 (EU) EU Barroso with Denmark PM Thorning-Schmidt
- 7:45 (US) ICSC Chain Store Sales
- 8:00 (PL) Poland Dec Employment M/M: -0.1%e v +0.1% prior; Y/Y: 2.4%e v 2.5% prior
- 8:00 (PL) Poland Dec Avg Gross Wages M/M: 9.3%e v 1.8% prior; Y/Y: 4.4%e v 4.4% prior
- 8:30 (US) Dec Producer Price Index M/M: 0.1%e v 0.3% prior; PPI Ex Food & Energy M/M: 0.1%e v 0.1% prior
- 8:55 (US) Redbook Retail Sales
- 9:00 (US) Nov Total Net TIC Flows: $50.0Bev -$48.8B prior; Net Long-term TIC Flows: $40.0Be v $4.8B prior
- 9:15 (US) Dec Industrial Production: +0.5%e v -0.2% prior; Capacity Utilization: 78.1%e v 77.8% prior
- 9:30 (US) Fed's Tarullo to testify on Volcker Rule
- 9:30 (BR) Brazil Central Bank Currency Flow Data.
- 9:45 (UK) BOE to buy £1.7B in 2022-2036 Gilts in reverse auction
- 10:00 (US) Jan NAHB Housing Market Index: 22e v 21 prior
- 10:30 (CA) Bank of Canada Monetary Policy Report
- 11:00 (US) Fed to buy $8.0-8.75B in Notes
- 11:30 (US) Treasury to sell 4-Week Bills
- 13:30 (DE) ECB member Weidmann
- 16:30 (US) API Weekly Energy Inventories
- (CN) EU Barnier continues official visit to Beijing, China
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.