Wednesday, March 14, 2012 6:34:17 AM TradeTheNews.com European Market Update: Early release of US banking sector stress tests provides some relief; UK avg wages at 18-month lows***Economic Data***
- (EU) ECB: €14.7B borrowed in overnight loan facility v €15.6B prior; €816.0B parked in deposit facility vs. €795.2B prior
- (JP) Japan Feb Final Machine Tool Orders Y/Y: -8.6% v -8.6% prior
- (IN) India Feb Monthly Wholesale Prices (WPI) Y/Y: 7.0% v 6.7%e
- (FI) Finland Feb CPI M/M: 0.6 v 0.6% prior; Y/Y: 3.1% v 3.2% prior
- (HU) Hungary Jan Final Industrial Production M/M: 2.1% v 2.1% prelim; Y/Y: -2.7% v -2.7% prelim
- (AT) Austria Feb Consumer Price Index M/M: +0.5 v -0.5% prior; Y/Y: 2.6 v 2.8% prior
- (SE) Sweden Feb PES Unemployment Rate: 4.7% v 4.8%e
- (UK) Feb Jobless Claims Change: +7.2K v +5.0Ke; Claimant Count Rate: 5.0% v 5.0%e - (UK) Jan Average Weekly Earnings 3M/Y: 1.4% v 1.9%e (18-month low); Weekly Earnings ex-Bonus 3M/Y:1.7% v 1.9%e
- (UK) Jan ILO Unemployment Rate: 8.4% v 8.4%e
- (EU) Euro Zone Feb CPI M/M: 0.5% v 0.5%e; Y/Y: 2.7% v 2.7%e; CPI Core Y/Y: 1.5% v 1.6%e - (EU) Euro Zone Jan Industrial Production M/M: 0.2% v 0.5%e; Y/Y: -1.2% v -0.8%e
- (CH) Swiss Mar Credit Suisse ZEW Expectations: 0.0 (flat) v -21.2 prior
Fixed Income: - (RU) Russia sells RUB19.2B vs. RUB18.0B indicated in 2017 OFZ Bond; Yield 7.46%
- (EU) ECB allotted $2.3B in 7-Day USD Liquidity Tender at fixed 0.62% vs. $1.6B prior
- (IT) Italy Debt Agency (Tesoro) sold total €6.0B vs. €4.5-6.0B indicated range in 2015 and 2019 Bonds
- Sold €5.0B vs. €5.0Be in 2.60% Mar 2015 BTP; Avg Yield 2.76% v 3.41% prior (lowest yield since Oct 2010); Bid-to-cover: 1.56x v 1.40x prior
- Sold €1.0B vs. €1.0Be in 4.25% Sept 2019 Bono Bonds; Avg Yield 4.30% v 5.81% prior; Bid-to-cover: 2.0x v 1.62x prior
- (SE) Sweden sold SEK10.0B vs. SEK10.0B indicated in 6-month Bills; Yield 1.3901%
- (HU) Hungary Debt Agency (AKK) sold HUF55B 12-Month Bill; Avg Yield 7.47% v 7.46% prior; Bid-to-cover: 1.95x v 2.22 prior
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Fed released results of banking sector stress tests early with 79% passing (citi failed)
- China Premier Wen cautioned against its property market; Letting up on regulation would risk "chaos"
- USD benefits as Fed gave no QE3 hints
- Magnitude 6.8 earthquake detected in the northern region, Iwate prefecture of Japan
- UK average wages fell to its lowest level in 18 months
Equities:
FTSE 100 +0.40% at 5977, DAX +1.1% at 7070, CAC-40 +0.70% at 3574, IBEX-35 +1% at 8457, FTSE MIB +0.90% at 16,947, SMI +0.70% at 6301
- European shares rose boosted by the banking sector after Fed's statement noted an improvement in the US economy stating that strains in the global financial markets have eased and that labor market is gaining strength. Fed also issued the stress tests for the US banks; apart from three most of the banks had passed the test
- E.ON [EOAN.DE] was trading higher despite a net loss, although EBITDA and Revenue came in higher than expected. Company guided profit for the next years. Legal and General [LGEN.UK] was the biggest winner in London trading after beating estimates and boosting dividend.
Speakers: - EU formally approves second Greek bailout, as expected
- Spain PM Rajoy commented that the country's new deficit target of 5.3% was reasonable and achievable and it sought to do most reforms in the first year
- German cabinet approves euro area permanent bailout fund, ministers support ESM
- Saudi Oil Min Ali al-Naimi commented that the Kingdom and others remained poised to fill any supply shortfalls that were "perceived or real" . He noted that crude markets were balanced overall and there was enough capacity for production and refining. He added that speculation was driving oil price volatility
- OPEC Sec Gen El-Badri commented that high prices were due in part to excessive speculation and that such price volatility could affect oil investment
- Iran Oil Min commented that the consumer/producer discussions were unsuccessful due to sanctions and oil politic. He noted that economic constraints threatened oil supply
- IEA released its monthly report which noted that Oil demand growth likely to remain subdued due to economic prospects, especially if prices remained elevated . IEA maintained 2012 world oil demand growth at 800k b/d but cut its 2012 non-OPEC supply forecast by 200K bpd to 53.5M bpd. In its comments the IEA stated that oil supply risks accentuated market tightening since mid-2010 period as crude inventories in Europe and Pacific region looked very tight. Global oil supply declined despite 30-year Saudi production high and such tight oil markets meant a bumpy ride for markets in the coming months. Iran sanctions could remove 0.8-1.0M bpd from markets and that Iranian banking sanctions were already having big effect on oil trade
- Former PBoC advisor Li Yang commented that the Euro zone sovereign debt crisis might take 5-10 years to be over
- German Econ Advisor Bofinger (wisemen) stated that he backed the ECB liquidity moves as the aim was to restore stability in the banking system. He added that he saw no inflation risk and that the ECB's move had helped to bring interest rates of sovereign bonds down. There was currently no strong lending activity of banks to companies or private individuals in southern European countries thus no increase in currency
- S&P Managing Dir Chambers commented that "watering down" of US budget control act risked its sovereign rating
- Swiss Fin Min Widmer-Schlumpf reiterated that the SNB needed freedom to make decisions and the government rejected a limit on the SNB's debt level
- Greece Feb bank deposits said to have declined €3B v €2B prior month
- Feb Spanish bank borrowings from ECB at €169.8B v €161.4B prior
- China Central Bank (PBoC) Advisors Li Daokui, Zhou Qiren and Xia Bin to step down from monetary policy committee
Currencies:
- Dealers noted that funding currencies were the rage as both the JPY and CHF weaker against their major pairs as a better risk back drop encourage demand for speculative positioning
- The USD benefits as Fed gives no QE3 hints. The USD/JPY hit fresh 11-month high at 83.50 while the USD/CHF hit 1-month highs above 0.9270.
- The EUR/USD continued to face technical headwinds in moving back above the 1.31 area. The pair did test 1.3030 as the Chinese Shanghai Composite fell by 2.6% after comments from PM Wen on the Chinese property market but steadied during the European morning.
Political
- The Saudi Oil Minister Ali al-Naimi stated that Saudi Arabia and others remain poised to fill any supply shortfalls that are "perceived or real". Overall, crude markets are balanced with enough capacity for production and refining. The volatility in oil prices is the result of speculation.
- During the prior trading session it was reported that EU finance ministers had reached a compromise on suspending Hungary's structural aid funds. It was to review the suspension on June 22nd with a possibility of lifting the suspension at that time. Hungary plans to address EU budget concerns next month.
- International Swaps and Derivatives Association (ISDA) published a supplement list of Greek bonds for CDS action, indicated that 12 members voted in favor with the remaining three against. There was no reason given for the dissenters.
- EU Commissioner's Rehn stated that Ireland must pay its €3.1B bank bill due in March. The amount must be repaid under an EU-backed arrangement under which Ireland is recapitalizing the former banks Anglo Irish Bank and Irish Nationwide Building Society with promissory notes.
***Looking Ahead***
- (IS) Israel Q4 Current Account: No est v $586M prior
- 7:00 (PL) Poland to sell up to PLN3.5B in Zero Coupon Bonds
- 7:00 (EU) EU to sign short-selling and naked CDS rules into law
- 7:00 (US) MBA Mortgage Applications w/e Mar 9th: No est v -1.2% prior
- 7:00 (ZA) South Africa Jan Retail Sales Constant M/M: 1.2%e v 1.3% prior; Y/Y: 6.5%e v 8.7% prior
- 8:00 (EU) ECB member Praet speaks in Paris
- 8:30 (CA) Canada Q4 Capacity Utilization Rate: 81.6%e v 81.3% prior
- 8:30 (US) Feb Import Price Index M/M: 0.6%e v 0.3% prior; Y/Y: 5.8%e v 7.1% prior - 8:30 (US) Q4 Current Account Balance: -$115.0Be v -$110.3B prior
- 8:45 (DE) German Chancellor Merkel
- 9:00 (US) Fed Chairman Bernanke speaks to Community Bankers in Nashville, TN
- 9:00 (EU) OECD Padoan in Italy Parliament
- 9:00 (HU) Hungary Central Bank Minutes
- 9:00 (NO) Norway Central Bank (Norges) Interest Rate Decision: Expected to leave the Deposit Rates unchanged at 1.75%
- 9:00 (PL) Poland Feb M3 Money Supply M/M: +0.6%e v -0.8% prior
- 9:45 (UK) BOE member Haldane
- 10:00 (MX) Mexico Q4 Aggregate Supply & Demand: 4.7%e v 4.9% prior
- 10:30 (US) DOE Weekly energy inventories
- 10:45 (UK) BOE to buy £1.5B in 2019-2025 Gilts in reverse auction
- 11:00 (US) Fed to purchase $1.00-1.50B in Notes
- 11:30 (BR) Brazil Central Bank weekly currency flow data
- 12:00 (IC) Iceland Feb International Reserves (DKK): No est v 1.1B prior
- 13:00 (US) Treasury to sell 30-Year Bonds Reopening
- 13:00 (DE) German Chancellor Merkel holds Town Hall on German Economy in Heidelberg
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