TradeTheNews.com EU Market Update: Risk appetite wanes ahead of weekend release of China PMI Manufacturing data with whisper it could move into contraction territory; EMU unemployment continue to drif
Friday, May 31, 2013
TradeTheNews.com EU Market Update: Risk appetite wanes ahead of weekend release of China PMI Manufacturing data with whisper it could move into contraction territory; EMU unemployment continue to drift upwards
***Notes/Observations*** - Japan's Financial Services Agency (FSA) spokesperson: No decisions made on binary options rule (refers to rumors that Japan might implement new FX margin trading rules designed to protect investors and limit scope for speculation - Japanese banks said to have already reduced their JGB holdings to the lowest levels in nearly 2 years - Japan data showing positive aspects of Abenomics as Industrial Production registered its 5th straight rise while overall household consumption scored its 4th consecutive rise - Japan inflation data, where the stripped-down and most recent Tokyo core component for the month of May showed its first on-year increase since the middle of 2011 - Rumor China Manufacturing PMI might move into contraction territory </ >- Italy April Unemployment hits a 36-year high at 12.0% - Euro Zone Unemployment hits fresh record high at 12.2%
***Economic Data*** - (RU) Russia Narrow Money Supply w/e May 27th (RUB): 7.69T v 7.70T - (JP) Japan Apr Vehicle Production Y/Y: -6.5% v -16.4% prior - (JP) Japan Apr Annualized Housing Starts: 939K v 924Ke; Y/Y: 5.8% v 4.1%e; Construction Orders Y/Y: +2.0% v -3.4% prior </ >- (IN) India Q1 Preliminary Annual GDP Govt. Estimate Y/Y: 5.0% v 5.0%e; quarterly GDP Y/Y: 4.8% v 4.8%e - (DE) Germany Apr Retail Sales M/M: -0.4% v +0.2%e; Y/Y: 1.8% v 1.1%e - (FI) Finland Mar Final Trade Balance: -€234M v -€225M prelim - (FI) Finland Apr House Price Index M/M: -0.2% v +0.5% prior; Y/Y: 1.4% v 2.2% prior - (FR) France Apr Producer Prices M/M: -0.9% v -0.3%e; Y/Y: 0.6% v 1.6%e - (FR) France Apr Consumer Spending M/M: -0.3% v -0.6%e; Y/Y: 0.2% v 0.0%e - (HU) Hungary Apr Producer Prices M/M: -1.2% v +1.6% prior; Y/Y: 0.7% v 1.2%e - (DK) Denmark Q1 Preliminary GDP Q/Q: 0.2% v 0.2%e; Y/Y: -0.8% v -0.7%e - (CH) Swiss May KOF Leading Indicator: 1.10 v 1.07e - (TR) Turkey Apr Trade Balance: -$10.3B v -$7.8Be - (DE) Germany March Real Wholesale Sales M/M: -0.5%; Y/Y: -7.2% - (EU) ECB: €916M borrowed in overnight loan facility vs. €52M prior; €85.6B parked in deposit facility vs. €82.4B prior - (SE) Sweden Q1 Current Account (SEK): 67.9B v 63.0B prior - (TH) Thailand Apr Current Account Balance: -$3.6B v -$1.0Be; Total Trade Account Balance: -$1.6B v +$2.0B prior; Overall Trade Balance: +$305M v -$65M prior; Total Exports Y/Y: 3.7% v 4.2% prior; Total Imports Y/Y: 8.5% v -12.5% prior - (TH) Thailand Apr Business Sentiment Index: 48.8 v 54.4 prior - (IT) Italy Apr Preliminary Unemployment Rate: 12.0% v 11.6%e, 36-year high - (IT) Italy Q1 Unemployment Rate Seasonally Adj: 11.9% v 11.6%e - (CZ) Czech Apr Money Supply Y/Y: 4.3% v 4.5% prior - (NO) Norway Q1 Manufacturing Wage Index Q/Q: 0.2% v 1.7% prior - (NO) Norway May Unemployment Rate: % v 2.4%e - (NO) Norway Apr Credit Indicator Growth Y/Y: 6.5% v 6.1%e - (UK) Apr Net Consumer Credit: £0.5B v £0.4Be; Net Lending: £0.9B v £0.5Be </ >- (UK) Apr Mortgage Approvals: 53.7K v 54.6Ke - (UK) Apr M4 Money Supply M/M: +0.3% v -0.9% prior; Y/Y: -0.1% v +0.3% prior; M4 Ex IOFCs 3M Annualized: 2.8% v 3.3%e - (HK) Hong Kong Apr M3 Money Supply Y/Y: 9.4% v 9.2% prior; M2 Money Supply Y/Y: No est v 9.2% prior; M1 Money Supply Y/Y: No est v 17.6% prior - (ES) Spain Mar Current Account: +€1.4B v -€1.3B prior - (EU) Euro Zone May CPI Estimate Y/Y: 1.4% v 1.4%e; CPI Core Y/Y: 1.2% v 1.1%e </ >- (EU) Euro Zone Apr Unemployment Rate: 12.2%e v 12.1% prior; fresh EMU record high - (IS) Iceland Apr Final Trade Balance (ISK): 4.9B v 5.1B prelim - (BE) Belgium Apr Unemployment Rate: 8.4% v 8.2% prior - (IT) Italy May Preliminary CPI (NIC incl. tobacco) M/M: 0.1% v 0.0%e; Y/Y: 1.2% v 1.2%e - (IT) Italy May Preliminary CPI EU Harmonized M/M: 0.0% v 0.0%e; Y/Y: 1.3% v 1.3%e - (GR) Greece Retail Sales Volume Y/Y: -5.6% v -14.4% prior; Retail Sales Value: -5.7% v -14.4% prior
Fixed Income: - (IN) India sold total INR150B vs. INR150B indicated in 2019, 2023, 2030 and 2041 bonds - (ZA) South Africa failed to sell I/L 2025, 2038 and 2050 bonds
***Equities*** </ >FTSE 100 -1.1% at 6,586, DAX -1.1% at 8,312, CAC-40 -1.3% at 3,946, IBEX-35 -1.2% at 8,333, SMI -1.2% at 7,926, S&P 500 Futures -0.70% at 1,641
- European equity markets are broadly weaker going into month end, amid some concerns about upcoming Chinese PMI data, which is due to be released over the weekend. Losses have been seen across the banking sector, led by declines in shares of Intesa and HSBC. Resource related companies are mixed, as precious metals miners have tracked the rebound in gold prices. Rio Tinto has traded lower, amid the decline being seen in copper prices.
Speakers: </ >- ECB's Visco (Italy) commented that Italy to register substantial output decline in 2013 and reiterated that the ECB was ready to intervene again on rates and consider all measures to maintain credit conditions consistent with monetary policy stance - EU Commissioner Rehn reiterated that EU members must use extra time for structural reforms. EMU could not afford traditional debt-driven stimulus but targeted stimulus might be sensible (**Reminder: On May 29th The EU Commission made its annual policy recommendation which noted that Spain, France, Netherlands, Poland and Slovenia to be allowed more time to meet deficit target) - Cyprus Fin Min Goergiandes: GDP may decline more than 8.7% this year - IMF commented on Sweden that its economic growth had recently moderated but the outlook looked for gradual improvement. It noted that the country should improve its macroprudential policy coordination and that financial stability was a main challenge ahead </ >- German Govt Coalition said to have requested that ECB chief Draghi attend the German Federal Constitutional Court hearing on Euro according to a letter from FDP floor leader Bruederle. Germany said to be worried over stability of Euro. Bundesbank President Weidmann would appear before the Constitutional Court (**Reminder: German Court hearing on ESM bailout scheduled for Jun 11-12th and to include examining ECB's program to possible buy govt bonds (OMT)) - Japan Vice Fin Min Furusawa commented that the priority of the cabinet was to end deflation and reiterated that it would continue to monitor risks from any spike in JGB yields. He saw clear signs of domestic economic recovery and added that Japan's financial system was healthy and sound - IMF's First Deputy Managing Director Lipton reiterated view that current JPY currency (yen) depreciation was not seen as problematic, currency is 'moderately below' Japan's medium term fundamentals. Forceful BOJ policy was best chance to escape deflation and saw high chance that 2% target being achievable in near-to-med term. BoJ taking appropriate measures to contain excessive volatility in JGB market and added that Japan fiscal risks had risen. Forecasted Japan 2013 GDP at 1.6%, 2014 GDP at 1.4% and that the domestic recovery was gaining traction and was expected to be sustained in 2014. - India PM Singh: India inflation will fall in the following months - Indonesia Deputy Gov Warjiyo commented that it might raise interest rates if inflation exceeded target. He added that was satisfied with current level of IND currency (rupiah) - OPEC Oil Ministers commented ahead of scheduled production meeting - OPEC Gen Sec El-Badri: Will decide on new Gen Sec in December; today's meeting will decide on criteria - Angola Oil Min: Need to analyze impact of shale oil but sees no threat from its production; Asia and Europe are possible destinations for LNG; Sees a growing market in China; country's current production is 1.7M bps - Iran Oil Min: OPEC quota decision depends on market; Presidential elections will not change its oil policy; Recommends keeping OPEC production ceiling unchanged - Saudi Oil Min: Reiterates shale is a welcome addition to global supply; not concerned by global oil demand; oil inventories are moderate; says $100 per barrel is reasonable - Algerian Oil Min: Want higher oil prices with Brent in range between $100-120 per barrel - Venezuela Oil Min: Believes consensus is to maintain current OPEC prodiction target of 30M bpd; More concerned about EU-US economies than US Shale Oil - Qatar Oil Min: OPEC wants to maintain balance between oil supply and demand; Oil market is stable, situation 'comfortable' - Nigerian OPEC Delegate: January to date all Nigerian crude has been sold
Currencies/Fixed Income: - The USD began the session on a firmer footing after European equity markets opened weaker. Dealers noting that upcoming China Manufacturing PMI might move into contraction territory (prior reading was 50.0) when it is released over the upcoming weekend. Comments from ECB's Visco that the ECB was ready to intervene again on rates and consider all measures to maintain credit conditions consistent with monetary policy stance sent the EUR/USD to session lows below the 1.30 handle - The USD/JPY retested the pivotal 100.50 hourly support and found the momentum to finally break the allege option barrier. The yen had been firmer after reports late Thursday circulated that rumors that Japan might implement new FX margin trading rules designed to protect investors and limit scope for speculation. The key trend support for USD/JPY seen at 99.70 - India's INR currency (rupee) at 11-month lows following release of GDP data; pair tested above 56.60 - South Africa ZAR currency (rand) hits fresh 4-year lows as pair approaches 10.30 - CNY currency firmed against the USD by 0.5% in May vs. prior 0.7% April appreciation - Spot gold decoupled from its usual inverse relationship with the greenback and was trading up over $20/oz at $1,413/oz.
Political/In the Papers: - (EU) Fitch comments on EC recommendations for 5 EMU nations to receive time on deficit reduction; Easing in the pace of fiscal austerity will not be sufficient to underpin a broad-based and sustainable economic recovery without further progress on banking union and structural reforms to raise the growth and job-creation potential of economies across the region; eurozone sovereign ratings already incorporate less stringent deficit reduction targets than those previously set out, reflecting the weaker economic outlook. -(EU) German Gov Coalition requests that ECB chief Draghi attend the German Federal Constitutional Court hearing on Euro - financial press citing letter from FDP - (EU) Some European bond investors have been seeking to lower the duration of their bond portfolios - US financial press - (FR) France Apr Total Jobseekers hits record high of 3.26M - (DE) German Fin Min Schaeuble: Germany will reach goal to pay down debt in 2015 if it sticks to consolidation course - (PT) Portugal Govt approves budget amendment for 2013 following Troika discussions in April - financial press; Amendment would lower structural spending instead of tax increases and may replace measures previously blocked by the Constitutional court; Amendment will target a 5.5% budget deficit for 2013 - S&P releases ratings actions on several Spain autonomous regions; Affirms Andalusia at BBB-; Outlook negative; Affirms Catalonia at BB, outlook negative - (UK) British Chambers of Commerce (BCC) raises economic outlook (1st raise since 2008); sees 2013 GDP at 0.9% vs 0.6% prior, 2014 GDP at 1.9% v 1.7% prior; Cites stronger consumer spending, services. - (UK) Treasury official Alexander suggested that the government's spending review could be supportive to capital spending; notes momentum is starting to return to the economy - London Telegraph - (UK) UK GFK May Consumer Confidence: -22 V -26E (6-month high) - (JP) Japan's Financial Services Agency (FSA) spokesperson: No decisions made on binary options rule: **NOTE earlier: (JP) Japan's Financial Services Agency (FSA) aims to implement new FX margin trading rules designed to protect investors and limit scope for speculation - Japan press - (JP) Japan Fin Min Aso: Currently not mulling plans to delay sales tax increase - financial press -(JP) PIMCO's El-Erian: in a few months expect hyperactive BOJ policy will be shown to be increasingly ineffective which may force it to do even more - CNBC interview
**Looking Ahead*** All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent) - (AT) OPEC Meeting in Vienna - (IT) Bank of Italy annual assembly in Rome - (IT) Italy PM Letta with EU President Van Rompuy in Rome - (JP) Bank of Japan Dep Gov Nakaso speaks in Tokyo - (GR) Eurogroup chief Dijsselbloem in Athens - (EU) EU President Van Rpmopuy with Italy PM Letta in Rome - (CO) Colombia Central Bank Interest Rate Decision: Expected to leave Overnight Lending Rate unchanged at 3.25% - 06:00 (UK) BOE's Haldane in Italy - 06:00 (EU) ECB announces 3-Year LTRO Repayment ; €4.0Be </ >- 06:10 (UK) DMO to sell £2.5B in 1-month, 3-month and 6-month Bills - 06:30 (US) Daily Libor Fixings - 06:30 (IN) India Apr Fiscal Deficit - 07:30 (IN) Weekly India Forex Reserves - 08:00 (AT) OPEC press conference </ >- 08:00 (PL) Poland Central Bank (NBP) May Inflation Expectations: 0.9%e v 1.1% prior - 08:00 (ZA) South Africa Apr Trade Balance (ZAR): -9.8Be v -7.8B prior - 08:30 (US) Apr Personal Income: 0.1%e v 0.2% prior; Personal Spending: 0.0%e v 0.2% prior </ >- 08:30 (US) Apr PCE Deflator M/M: -0.2%e v -0.1% prior; Y/Y: 0.8%e v 1.0% prior - 08:30 (US) Apr PCE Core M/M: 0.1%e v 0.0% prior; Y/Y: 1.0%e v 1.1% prior - 08:30 (CA) Canada Mar Gross Domestic Product M/M: 0.1%e v 0.3% prior; Y/Y: 1.5%e v 1.7% prior - 08:30 (CA) Canada Q1 Quarterly GDP Annualized: 2.3%e v 0.6% prior - 08:30 (US) Weekly USDA Net Export Sales - 08:45 (US) Fed's Pianalto speaks on Financial Stability in Washington - 09:00 (CL) Chile Apr Unemployment Rate: 6.3%e v 6.2% prior - 09:00 (US) May NAPM-Milwaukee: 49.00e v 48.43 prior - 09:30 (BR) Brazil Apr Nominal Budget Balance (BRL): No est v -15.9B prior; Primary Budget Balance: 13.5Be v 3.5B prior; Net Debt to GDP Ratio: No est v 35.5% prior - 09:45 (US) May Chicago Purchasing Manager: 50.0e v 49.0 prior </ >- 09:55 (US) May Final University of Michigan Confidence: 84.0e v 83.7 prior - 10:00 (MX) Mexico Apr Net Outstanding Loans (MXN): 2.325Te v 2.306T prior - 10:00 (US) Revisions to the Wholesale Sales and Inventories Report - 10:00 (US) Revisions of Retail Sales Released - 10:30 (BR) Brazil to sell 2014, 2015 and 2017 Bills - 11:00 (US) Fed's Liang speaks on Financial Stability in Washington - 11:00 (US) Tsy Sec Lew - 11:00 (US) Fed to purchase $4.25-5.25B in Notes - 12:00 (CO) Colombia Apr National Unemployment Rate: No est v 10.2% prior; Urban Unemployment Rate: 11.4%e v 11.6% prior - 15:00 (AR) Argentina Apr Construction Activity M/M: No est v 2.2% prior; Y/Y: No est v -2.9% prior
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