Monday, March 19, 2012 6:27:16 AM TradeTheNews.com European Market Update: Another Quiet European morning; Apple set to decide on its cash holdings***Economic Data***
- (EU) ECB: €11.8B borrowed in overnight loan facility v €992M prior; €758.8B parked in deposit facility vs. €727.7B prior
- (IN) India Feb CPI Y/Y: 8.8% v 7.7% prior
- (ZA) South Africa Q4 Current Account Balance (ZAR):-110.2B v -132.0Be; Ratio to GDP: -3.6% v -4.2%e
- (HK) Hong Kong Feb Unemployment Rate: 3.4% v 3.3%e
- (EU) Euro Zone Jan Current Account nsa: -€12.3B v €16.3B prior; Current Account Seasonally Adj: €4.5B v €2.0B prior
- (IT) Italy Jan Industrial Orders M/M: -7.4% v -3.2%e; Y/Y: -5.6% v -2.9%e
- (IT) Italy Jan Industrial Sales M/M: -4.9% v 3.2% prior; Y/Y: -4.4% v 5.4% prior
- (EU) Euro Zone Jan Construction Output M/M: -0.8% v -1.9% prior; Y/Y: -1.4% v 9.8% prior
- (ZA) South Africa Q1 BER Consumer Confidence: 5 v 5 prior
Fixed Income: - (SL) Slovakia Debt Agency (ARDAL) sold €300.6M in 2016 Bonds; Yield 2.8465%; bid-to-cover: 1.78x
- (NO) Norway sold NOK5.0B vs. NOK5.0B indicated in 12-month Bills; avg yield 1.59%
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- IMF warns again "of false sense of security"
- PIMCO's El-Erian sees Portugal to be the next Greece
- Apple [AAPL] to decide on what to do with its cash
***Equities*** FTSE 100 -0.40% at 5943, DAX -0.50% at 7119, CAC-40 -0.60% at 3572, IBEX-35 +0.70% at 8543, FTSE MIB flat at 17,081, SMI -0.30% at 6323
- European shares traded lower during the session, falling from the eight-month high prices sustained last week.
In M&A news, TNT Express [TNTE.NL] rose after UPS reached agreement to buy the company at a higher offer of €9.50/shr from €9.0/shr. Misys [MSY.UK] also rallied after agreeing to be bought by Magic Bidco for a value of £1.27B.
Speakers: - German Bundesbank member Nagel commented that the ECB should start to discuss the potential exit from emergency lending measures
- Reserve Bank of Australia (RBA) Gov Stevens commented that the global economy faced sub-trend growth in 2012 period and noted that downside risks were easier to see than upside. Slower China growth was required to ease inflationary pressures and that China had the capacity to respond if growth gets too slow. The gov added that there would be periods of continued EU anxiety in the years ahead.
- China Premier Wen reiterated the view that Europe should safeguard foreign debt and push ahead with fiscal consolidation
- China PBoC's Wang Yu commented that China would take measures to further increase domestic demand
- China PBoC Deputy Gov Du Jinfu stated that China needed to further cut its RRR
Japan DPJ Tax Panel Head Fujii: Yen currency could decline given Japan's economic fundamentals
- US Ambassador Locke commented that China should end discrimination against US companies and end its unfair practice of currency distortion
- Poland Central Bank's Kazmierczak stated in the Polish press that a tighter rate policy was likely following release of Feb CPI data.
- Thailand Ministry of Finance (MoF) stated that it might reduce its current fiscal year Govt Bond issuance due to high yields and would watch Wednesday auction before deciding on any changes to its offering. The MOF was considering cheaper alternatives to finance govt spending with Treasury bills could be one alternative to bonds
- South Korea said said to have established communication channels with various Asian countries regarding investments in its treasuries after expressing concerns over potential sudden exit. Countries include Indonesia, Thailand and Malaysia
- Fitch comments on commodities and noted that price volatility to continue in 2012 as Euro Zone sovereign debt concerns constrains market confidence. All commodities would not be equally affected as certain commodities groups to see demand lag positive and negative trends in economic growth. Precious metals tend to benefit from a flight to safety
Currencies:
- A quiet European calendar was in store for the session. The EUR/USD hovered around the 1.3150-60 level throughout the morning in lackluster trading.
- Japanese corporate names purchased JPY in the session to offset the weakness exhibited during the Asian session. Such exporter action was noticeable absent during the last week weeks as the JPY currency weakened. JPY strength emerged as the Hang Seng Index slumped in the last hour of trading. Analysts also pointed out that stretched positioning suggested that USD/JPY would struggle to extend its recent gains.
Political/ In the Papers:
- The Telegraph's Ambrose Evans-Pritchard looked at the factors affecting petrol prices and its effects on global growth. According to Bank of America, following the recent spike in oil prices, energy costs now make up about 9% of global GDP, near levels in the past which have triggered recessions. The firm believes that oil prices above $130 would pose a significant threat to growth.
- In an interview with the German press, PIMCO's El-Erian said that he sees Portugal to be the next Greece, and that it will require additional cash from Brussels to avoid a bust. This year would indicate whether the euro zone will break apart or become a smaller, stronger region; the first option being "less likely but definitely not to be ruled out".
- The UK Chancellor of the Exchequer expected to offer £40.0B in low rate loans to small businesses in an attempt to boost the economy.
***Looking Ahead***
- (GR) Initial Greek CDS results
- (EU) EFSF said to sell between €1.0-1.5B in 20-year bonds via syndicate
- 7:00 (NL) Netherlands Debt Agency (DSTA) to sell combined €2.0-4.0B in 3-month and 6-month Bills
- 7:30 (BR) Brazil Central Bank Weekly Economists Survey
-7:30 (CL) Chile Q4 GDP Q/Q: 1.0%e v 0.7% prior; Y/Y: 4.2%e v 4.8% prior; 2011 GDP Annualized: 6.3%e v 5.2% prior
-7:30 (CL) Chile Q4 Current Account: -$1.7Be v -$3.0B prior
- 7:45 (UK) Business Sec Cable
- 8:30 (CA) Canada Jan Wholesale Sales M/M: 0.4%e v 0.9% prior
- 8:35 (US) NY Fed's Dudley to speak about economy on Long Island
- 9:00 (PL) Poland Feb Sold Industrial Output M/M: +3.0%e v -5.1% prior; Y/Y: 8.8%e v 9.0% prior
- 9:00 (PL) Poland Feb Producer Prices M/M: 0.0%e v 0.2% prior; Y/Y: 6.6%e v 8.0% prior
- 9:00 (US) Apple conference call on its cash holdings
- 9:00 (RO) Romania to sell 12-month Bonds
- 9:30 (US) Fed's Killian on foreclosures
-10:00 (US) Mar NAHB Housing Market Index: 30e v 29 prior
- 10:00 (FR) France Debt Agency to sell combined €7.4B in 3-month, 6-month and 12-month Bills (BTF)
- 10:30 (EU) ECB announces weekly settlements in its Govt Bond Purchase program (SMP)
- 10:30 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
- 10:45 (UK) BOE to buy £1.5B 2015-2018 Gilts in reverse auction
- 11:00 (US) Fed to purchase $4.50-5.25B in Notes
- 11:30 (US) Treasury to sell 3-Month and 6-Month Bills
- 11:30 (US) NY Fed's Dudley to visit instrument maker on Long Island
- 12:30 (US) Portugal's Fin Min Gaspar speaks in Washington
- 13:00 (AS) ECB's Nowotny speaks in Vienna
- 13:00 (EU) EFSF's Regling, Luxembourg Fin Min Frieden speak in Luxembourg
- 13:40 (US) Fed's Dudley to Partake in Roundtable on Long Island
- 14:30 (AT) ECB's Nowotny speaks in Vienna
- CFTC, Registration of Swap Dealers and Major Swap Participants
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