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Back to The Headlines

Wednesday April 11, 2012 - 10:08:34 GMT
Trade the News Staff - www.global-view.com/forex-services/TTN/

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TradeTheNews.com EU Market Update: Italy Treasury blames return of debt crisis for higher yield at Bill auction; German 10-year Bund auction is 'technically uncovered' with record low yield

Wednesday, April 11, 2012 5:45:17 AM

 TradeTheNews.com EU Market Update: Italy Treasury blames return of debt crisis for higher yield at Bill auction; German 10-year Bund auction is 'technically uncovered' with record low yield

***Economic Data*** </
>- (DE) Germany Mar Wholesale Price Index M/M: 0.9% v 1.0% prior; Y/Y: 2.2% v 2.6% prior
- (DK) Denmark Feb Industrial Production M/M: -1.0% v 1.8% prior; Industrial Orders M/M: -5.1% v -5.3% prior
- (HU) Hungary Mar Consumer Prices M/M: 0.8% v 0.8%e; Y/Y: 5.5% v 5.5%e
- (ES) Spain Feb Industrial Output WDA Y/Y: -5.1% v -4.3% prior; Industrial Output NSA Y/Y: -3.0% v -2.5% prior
- (TR) Turkey Feb Current Account: -$4.2b v -$4.7Be
- (NO) Norway Feb Industrial Production M/M: -0.6% v +4.5% prior; Y/Y: 3.1% v 3.0% prior
- (NO) Norway Feb Manufacturing Production M/M: -0.7% v +1.1% prior; Y/Y: 0.8% v 1.7% prior

Fixed Income </
>- (DE) Denmark sold total DKK1.46B in 2016 and 2021 Bonds
- (RU) Russia sold RUB4.6B vs. RUB35.8B indicated in 2021 OFZ Bonds; Yield 8.0%
- (EU) ECB allotted $1.4B in 7-day USD liquidity operation at fixed 0.63% vs. $1.4B prior
- (SE) Sweden sold total SEK10.0B in 3-month and 5-month Bills
- (IT) Italy Debt Agency (Tesoro) sold total €11.0B vs. €11.0B indicated in 3-month and 12-month Bills
- Sells €3.0B vs €3.0Be in 3-Month Bills; Avg Yield 1.249% v 0.492% prior; Bid-to-cover: 1.81x v 2.23x prior
- Sells €8.0B vs. €8.0Be in 12-month Bills; Avg Yield 2.840% v 2.392% prior; Bid-to-cover: 1.52x v 1.38x prior
- (DE) Germany sold €3.87B in new 1.75% July 2022 Bunds; Avg Yield 1.77% v 1.83% prior; Bid-to-cover: 1.1x v 1.4x prior (technically uncovered)
- (UK) DMO sold £4.5B in 1.0% 2017 Gilts; Avg Yield 1.147% v 1.198% prior; Bid-to-cover: 1.37x v 1.95x prior; Tail 0.8bps v 0.4bps prior


*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Germany's 2-year yield below Japan for the first time ever
- Spanish 10-year Govt bond yield moved back above 6% in early Europe to its highest level since December 13th; 5-year Spanish CDS near record 500bps
- Italy Bill auction saw higher yields compared to the mid-March levels
- Bank of Japan said to be considering more easing at its April 27th policy meeting
- Japan: Machine orders stronger than expected.

***Equities*** </
>FTSE 100 +0.20% at 5606, DAX +1% at 6670, CAC-40 +0.80% at 3241, IBEX 35 +1.5% at 7549, FTSE MIB +1.7% at 14,710, SMI -0.20% at 6050

- European shares rallied after a two month low taking cue from strong US equities finish following better than expected earnings from Alcoa. European debt concerns continue to linger in the markets after Italian debt auction demanded higher borrowing costs. German auction was technically uncovered with a bid to cover at 1.1x but the yield was lower.
- Michael Page [MPI.UK] traded lower after its corporate update as company noted that visibility remained limited. European banks led the equities higher after being upgraded at HSBC.

Speakers: </
>- ECB's Coeure commented that USD funding market improved post-LTRO environment, though still not back to pre-crisis level. He noted that ECB decided on LTRO operation due to risk of deflation. He added that when ECB raises rates then LTRO rates would rise. Normalization is widening across various markets. Spain was taking reform measures. He stated that the €800B in excess liquidity would remain throughout 2012 and that an increase in ECB's balance sheet was not unusual
- Japan Fin Min Azumi reiterated that MOF was monitoring fx moves with serious concern and would examine JPY trend and mull a response. The MOF did not believe the BOJ is begrudging additional steps but watching JPY with sufficient interest. The MOF sought to have end of deflation in sight in first half of fiscal year. Japan to begin detailed discussions on IMF funding this week with other nations and hoped to announce Japan's stance after talks with China. He also sought Parliament to begin debate consumption tax in April
- Japan Currency Official reiterated the view that it would not tolerate excessive currency volatility and saw elements of speculation in recent yen currency moves. He cautioned Japan economy was too fragile to withstand a stronger JPY currency
- Spain PM Rajoy stated in Parliament that Spain had an urgent task of reducing its deficit. The Govt chose tax amnesty in order to avoid raising taxes and needs to approve a tax-fraud measure this week
- Spain Budget Min Montoro commented that deficit cuts are the fastest way to recover economic growth
- France gov't spokesperson stated that France considered fears about Spain's economic health to be excessive
- Italy Treasury stated that the return of the sovereign crisis affected today's auction and led to higher rates
- Thailand Central Bank official commented that risk appetite being was being weighed down by US economic data and concerns over European periphery. Thailand was not seeing any huge capital outflows but some mild foreign selling in its sovereign bonds.
- France Industry Min Besson commented that France remained open to possibilities of stockpile release
- BoE statement noted that there was more to do to reduce risk in the payment systems
- France Bank Federation President Oudea markets would continue to remain volatile for the next two years as reforms were implemented. He reiterated the view that there was no risk of credit crunch and that the EU's €800B firewall was sufficient. Lastly he added that a third 3-year lending LTRO operation would not be necessary
- France President Sarkozy warned that the interest rates on the country's sovereign debt would surge if the Socialists won the upcoming elections and rolled back reforms introduced by the government in recent years
- Russia President Putin commented that the global economy was entering period of turbulence and that Russia to create a 'new economy' to withstand shocks. Putin called for between 60-70% growth in average real wages by 2020
- Some economists in China believe the government should cut the RRR despite signs of inflows. Such a cut in the RRR could help increase funding for industrial companies and support growth.
- Iran said to be presenting 'new initiatives at upcoming nuclear discussions
- Indonesia reports earthquake registered a 8.7 magnitude in Ache province; tsunami warning issued - USGS

Currencies:
- The USD was softer in the early European morning with pending debt auction results from Italy and Germany to test overall risk sentiment. The Italian Bill yields were higher compared to similar maturities held back in March. The Italian Debt Agency was quick to blame the re-emergence of the European debt crisis. Nonetheless the EUR/USD maintained a foothold above the 1.31 level as the NY morning approached. The German new 10-year Bund auction was technically uncovered as it hit a fresh record low yield.
- JPY currency was mixed in its price action. The USD/JPY hit 1 month lows below 80.60 but held the pivotal 80.30 area which was the former high (now likely support) back in Aug 2011 when the BOJ performed solo FX intervention. Japanese press that BoJ could ease policy at its next meeting in late April. Japanese official were quite vocal with the recent appreciation of the JPY currency.

Political/ In the Papers:
- The Telegraph's Ambrose Evans-Pritchard commented on how concerns about recession and fiscal slippage have driven Spanish bond yields higher. Spanish ten-year yields have once again moved back to the "danger line" near 6%, while the IBEX-35 equity index has traded at lows not seen since 2009, suggesting that the rise has been driven by factors including deficit concerns, and the possible impact of austerity measures on growth.
- The UK Financial Services Authority (FSA) warned of rising mortgage debt as data indicate over 300,000 borrowers with interest-only loans missed or were late with at least one payment. Overall, banks are owed £14.8-23.7B. Five to eight percent of all mortgages are subject to forbearance, suggesting 196k-314k customers could be in this position. It was added that it could be much higher due to the way banks transferred borrowers in financial difficulty on to such loans.

***Looking Ahead***
- 6:00 (CZ) Czech Republic. to sell 2017 Bonds
- 6:00 (PT) Portugal Feb Construction Works Index: No est v 63.4 prior
- 7:00 (FI) Finland Parliament debates framework budget for 2013-2016
- 7:00 (US) MBA Mortgage Applications w/e Apr 6th: No est v 4.8% prior
- 7:00 (ZA) South Africa Feb Manufacturing Prod. M/M: 1.7%e v 1.7% prior; Y/Y: 2.7%e v 2.4% prior
- 7:00 (IE) Ireland Mar Consumer Confidence: No est v 57.0 prior
- 7:30 (CL) Chile Central Bank posts traders survey
- 8:00 (RU) Russia to sell up to RUB35.8B in OFZ Bonds
- 8:00 (HU) Hungary Central Bank's Minutes
- 8:15 (CA) Mar Housing Starts: No est v 201.1K prior
- 8:20 (US) Fed's Lockhart gives welcome and closing remarks at Georgia Conference
- 8:30 (US) Mar Import Price Index M/M: 0.8%e v 0.4% prior; Y/Y: 3.4%e v 5.5% prior
- 9:00 (US) IMF releases Financial Stability Chapters
- 9:00 (MX) Mexico Feb Industrial Production M/M: 0.5%e v 0.8% prior; Y/Y: 4.8%e v 4.2% prior
- 9:00 (MX) Mexico Feb Final Trade Balance: No est v 441.7M prior
- 9:30 (US) Fed's George to speak at Minsky Conference in New York
- 9:45 (UK) BOE to buy £1.5B in 2019-2025 Gilts
- 10:30 (US) Fed's Rosengren speaks on Money Funds at Georgia Conference
- 10:30 (US) Weekly DOE Energy Inventories
- 11:00 (US) Fed to sell $8-8.75B in Notes
- 11:30 (BR) Brazil Central Bank weekly currency flows
- 12:00 (US) Fed's Lockhart
- 13:00 (US) Treasury to sell $21.0B in 10-Year Notes Reopening
- 14:00 (US) Fed releases Beige Book Economic Survey
- 14:00 (US) Fed's Beige Book </
>- 14:00 (US) Mar Monthly Budget Statement: -$196.0Be v -$188.2B prior
- 17:00 (US) Fed's Bullard delivers opening remarks in St. Louis
- 18:00 (NO) Norway Central Bank (Norges) Gov Olsen
- 18:15 (US) Fed's Yellen

 

 

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