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The India and Turkey central banks have dived back into the FX intervention game. The Turkish Central Bank has begun direct market intervention to fight "excessive FX volatility" after the TRY sank to
TradeTheNews.com US Market Update: BoJ Holds Policy Steady and Fed Taper Rumors Drive Broad-Based Equity Sell-off
Tue, 11 Jun 2013 11:13 AM EST
- (EU) OECD Apr unemployment rate: 8.0% v 8.0% prior
- (IL) Israel May Trade Balance: -$1.1 v -$1.2B prior
- (PT) Portugal Apr Construction Works Index: 47.7 v 47.8 prior
- (ZA) South Africa Apr Manufacturing Production M/M: +1.8%e v -2.5% prior; Y/Y: +2.0%e v -2.2% prior
- (US) May NFIB Small Business Optimism: 94.4 v 92.1e
- (US) ICSC Chain Store Sales w/e Jun 7th: w/w -2.7%; Y/Y: +2.2%
- (US) Redbook Retail Sales w/e Jun 7th: +2.8% y/y, Jun MTD: -0.5% m/m
- (MX) Mexico Apr Industrial Production M/M: -1.7%% v +0.5%e; Y/Y: 3.3% v 5.3%e; Manufacturing Production Y/Y: +5.6% v -5.8% prior
- (EU) Weekly ECB Forex Reserves: €219.2B v €218.8B prior
- (US) Apr Wholesale Inventories M/M: 0.5% v 0.2%e; Wholesale Sales M/M: 0.2% v -0.1%e
- (US) Apr JOLTs Job Openings: 3.76M v 3.87Me
- (UK) May NIESR GDP Estimate: 0.6% v 0.8% prior
- European and US equities are at or near their session lows this morning after the BoJ held its policy steady and added no further easing measures. Treasury yields popped higher in the overall risk-off environment, with the 10-year benchmark US yield touching 14-month highs around 2.29%. In Europe, the German Constitutional Court is hearing arguments about German participation in the ECB's OMT backstop, adding to the sense of unease. As of writing, the DJIA is down 0.47%, the S&P500 is down 0.64% and the Nasdaq is off 0.57%.
- USD/JPY is not far off of session lows around 96.60 this morning, with yen strength clearly inspired by the BoJ's lack of action. Note that rumors circulated this morning suggesting that the Fed could test the waters by tapering bond purchases by $5-10B as soon as next week. EUR/USD trading was choppy, with the pair as low as 1.3230 and up as high as 1.3315.
- The India and Turkey central banks have dived back into the FX intervention game. The Turkish Central Bank has begun direct market intervention to fight "excessive FX volatility" after the TRY sank to its weakest level against a euro/dollar basket since October 2011. The bank held five FX auctions this morning and managed to stabilize USD/ TRY for the moment around 1.8900. India's policies are more opaque: there were rumors of RBI intervention as USD/INR looked to test the key 60 level and then dropped back to the 58 handle. An Indian government official stated that "steps will be taken" to curb rupee volatility if needed, but said the recent decline was due to "debt outflows."
- Volatile solar names are in the dumps this morning after LDK Solar lost more money than expected in its Q1 even as revenue outperformed. Note that the firm's Q2 revenue guidance was well below par. JKS is down more than 6%, YGE is down 5% or so and LDK is down more than 9%.
- Gamestop is up 7% this morning after both Microsoft and Sony unveiled rival gaming consoles at the E3 gaming expo. Sony was clear in indicating that the PlayStation 4 would place no restrictions on used games, while Microsoft's policy continues to be somewhat opaque. Microsoft's policy indicates "publishers can enable you to trade in your games at participating retailers" but many are taking that to be a legal dodge that will still shut down the aftermarket.
- Cult name Lululemon is down 17% this morning. The apparel name broadly met expectations in its Q1 report and Q2 guidance, however inventory levels jumped, gross margins narrowed and the CEO said she was planning to step down soon.
- Softbank responded last night to Dish's continued overtures to Sprint by raising its acquisition offer slightly, to $21.6B from $20.1B prior. SoftBank said it would give an additional $4.5B of cash to Sprint stockholders at closing, bringing the total cash component of the deal to $16.64B. Shares of Sprint are up 2% or so in the early going.
- Dole Food has received an unsolicited $12/shr buyout offer from CEO David Murdock valuing the company around $1.5 billion. Murdock already owns about 40% of the company, and his offer represents a premium of about 18% to the stock's prior close. Shares of DOLE are up more than 20%.
- 11:30 (IT) Italy's EU Affairs Min
- 11:30 (US) Treasury to sell $35B in 4-Week Bills
- 12:00 World Bank President Kim
- 12:00 (US) DOE Short-Term Crude Outlook
- 12:00 (BR) Brazil to sell I/L 2018, 2022, 2030, 2040 and 2050 Bonds
- 12:30 (EU) ECB's Praet (Belgium) speaks in Frankfurt
- 13:00 (US) Treasury to sell $32B in 3-Year Notes
- 13:30 (BR) Brazil Apr CNI Capacity Utilization: 82.3%e v 82.2% prior
- 16:30 (US) Weekly API U.S. Crude Oil Inventories
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