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Forex Blog - European Market Update for Wednesday August 13th: BOE paints a slowing GDP outlook
Â·*** ECONOMIC DATA ***
- (CH) Jul M2 Money Supply Y/Y: 16.35% v 17. 1%e
- (SP) Spain July CPI M/M: -0.5% v -0.5%e; Y/Y: 5.3% v 5. 2%e
- (SP) Spain July Core CPI M/M: -0.9% v -1.0%e; Y/Y: 3.5% v 3. 4%e
- (SP) Spain July CPI EU-Harmonized M/M: -0.5% v -0.5%e; Y/Y: 5. 3% v 5.3%e
- (NO) Norway Jun Retail Sales M/M: -0.2% v 0.2%e; Y/Y: 0. 1% v 1.0%e
- (UK) Jul Claimant Count Rate: 2.7% v 2.6%e; Jobless Change: 20.1K v 17.0Ke
- Manu. Unit Wage Cost: 1.6% v 1.9% prior
- (UK) Jun Avg Earnings Inc Bonus: 3.4% v 3.6%e; Avg Earnings Ex-Bonus: 3.7% v
- (UK) Jun ILO Unemployment rate: 5.4% v 5. 3%e
- (EU) Jun Euro-Zone industrial Production M/M: 0.0% v 0.1%e; Y/Y: -0.5% v
- (UK) BOE Quarterly Inflation Report
- (IT) sells EUR2.5B 4.25% 2019 Bonds
- (GE) Germany Sells EUR4.85B July 2018 Bund, avg yield 4.24%, Bid-to-cover
1.8x v 1.1x prior
- (PO) Portugal sell EUR750M 10-year bonds, avg yield 4.674%, Bid-to-cover 2.
1x v 1.7x prior
Â·*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
Â·In equity news overnight ING [INGA.NV] reported Q2 Net â‚¬1.92b which was above
the consensus estimate of â‚¬1.56B. For the quarter there was â‚¬44M in Write Offs
due to subprime The Company stated that it was confident in a long term growth.
ING attributed the net declined due to its wholesale banking and insurance
underperformance. The bank saw its financial services experiencing
unprecedented volatility well into 2009
- Hypo Reat estated [HRZ.GE] reported Q2 Pretax of â‚¬17M compared to analyst
estimates of â‚¬38M. Net interest income came in at â‚¬304M versus â‚¬298Me, Tier 1
Capital 8.6% v 8.3% q/q.
- K+S AG [SDF.GE]reported Q2 Adj Net â‚¬231.1M above the â‚¬163M estimates. Op
Profit â‚¬326.4M was above the â‚¬223.5M consensus, Copany sales â‚¬1.18B v â‚¬1.14B
- Zurich Financial [ZURN.SZ] reported H1 Net $2.7B against consensus estimates
of $2.62Be; ROE 19.5% v 19.1%e. The company stated that it was on track to
achieve its efficiency targets of $800M to 2010 and added that it does not have
a material CDO exposure.
- Q-Cells [QCE.GE] Reporte H1 Rev â‚¬579.5M which was well above analyst
estimates of 296M. Its Q2 EBIT came in at â‚¬66.1M v â‚¬61Me. Q-Cells raised their
forecast for 2008 and beyond.
- Thomas Cook [TCG.UK] provided an interim management report. Company stated
that trading conditions continue to be strong in the summer months.
- In energy: WSJ reports that oil negotiations between various foreign
companies and the Iraqi government appear to have stalled
- Oil ministry officials said they hoped to sign contracts by the end of June
and now talks may have hit new snags.
- (CH) China raises consumption tax on 4-liter auto to 40% from 20%; effective
- Georgian President Accuses Russia Of Violating Ceasefire. Russia Foreign
Minster Sergei Lavrov says Russian troops to maintain role in the Southern
- In the papers: Heard on the Street notes that credit problems still exist in
markets. WSJ notes that credit markets will remain turbulent until housing
- The article adds that wishful thinking with respect to banks about their
mortgage-backed holdings is preventing the kind of capitulation needed to get
markets trading again.
- Heard on the Street notes that the markets for mortgage-backed securities
have worsened, largely due to concerns about the US GSEs and uncertainty over
any support the government will have to provide to Fannie and Freddie.
- When looking at the difference in prices between mortgage-backed securities
guaranteed by Fannie and Freddie and Treasuries, spreads widened to 0.65% in
recent days vs about 0.50% at the time of the Bear Stearns crisis in March.
- NY Times examined whether the short-selling rule helped to boost stock
Â·*** NOTES ***
- The UK quarterly inflation report highlighted the recent concerns among
centrals banks of the delicate balance between growth and inflation. The BOE
lowered their GDP outlook for 2009 and expected that a protracted slowdown was
necessary to bring CPI back within the 2% target. BOE King says UK economy
facing a 'painful' adjustment period which cannot be avoided. The inflation
reported was preceded by the UK Claimant count data, which rose by its highest
amount in 16 years. European fixed-income futures soared into positive
territory following the BOE report. However, equity markets seems concerned
over the increase in gloom over the global economic scenario. The financial
sectors helping the equities move lower as dealers ponder renewed credit
jitters. The UK quarterly report caused sharp price movements in both
currencies and fixed-income futures. GBP/USD exhibited weakness following the
UK GDP scenario as it tested its lowest level in 2-years at 1. 8760. Sept Gilts
up 40 ticks
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