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TradeTheNews.com EU Market Update: Quiet session as Germany confirms it avoided recession
Tue, 25 Nov 2014 5:26 AM EST
***Notes/Observations***
- BoJ minutes detail need for pre-emptive action...The twin culprits pulling
inflation lower were April's consumption tax increase
- German Q3 Final GDP data confirmed it narrowly missed a technical recession
**Economic Data***
- (DE) Germany Q3 Final GDP reading in line; Q/Q: 0.1% v 0.1%e; Y/Y: 1.2% v
1.2%e; GDP WDA Y/Y: 1.2% v 1.2%e
- (FI) Finland Oct Unemployment Rate: 8.3% v 8.0%e
- (FR) France Nov Confidence data beats;
Business Confidence: 94 v 92e; Manufacturing Confidence: 99 v 97e;
- (HK) Hong Kong Oct Trade Balance (HKD): -49.8B v -45.3Be; Exports Y/Y: 2.7% v
3.4%e; Imports Y/Y: 5.6% v 4.3%e
- (ZA) South Africa Q3 GDP data roughly
in line; Annualized Q/Q: 1.4% v 1.5%e; Y/Y: 1.4% v 1.4%e
- (UK) Oct BBA Loans for House Purchase
missed; 37.1K v 38.5Ke (lowest since May 2013)
Fixed Income:
- (ES) Spain Debt Agency (Tesoro) auction results steady; sold total €4.1B vs.
€3.0-4.0B indicated range in 3-Month and 9-Month Bills
- Sold €845M in 3-month Bills; Avg Yield: 0.073% v 0.130% prior; Bid-to-cover:
3.14x v 3.3x prior
- Sold €3.26B in 9-month Bills; Avg Yield: 0.296% v 0.359% prior; Bid-to-cover:
1.77x v 2.08x prior
- (NL) Netherlands Debt Agency (DSTA)
sold €1.8B vs. €1.0-2.5B indicated range in 2% July 2024 Bonds; Avg Yield:
0.895% v 1.137% prior
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
**Equities**
Indices [Stoxx50 +0.7%, FTSE 100 +0.1% at 6,737, DAX +1.0% at 9,880,
CAC-40 +0.5% at 4,388, IBEX-35 1.0% at 10,745, FTSE MIB +0.7% at 20,062, SMI
+0.2% at 9,071, S&P 500 Futures +0.1% at 2,069]
- Market Focal Points/Key Themes:
Equity markets are trading higher after opening slightly in the red with the
markets being relieved after German Q3 GDP came in as expected avoiding a
technical recession.
- Earnings Recap (Topps Tile:
raises dividend, Chemring: rev lower on delays, De La Rue: rev falls, Severn
Trent: cost cuts, Quintain estates: increases housebuilding, Kingfisher: rev
below est, Zoopla: rev increase, Greencore: good outlook, Mitchells &
Butlers: rev rises)
By Sector
- Industrials [Volvo VOLVA.SE +0.6% (makes €400M provision for
antitrust)
- Healthcare [Bayer BAYN.DE
+0.6% (may sell diabetes unit), Sinclair Pharma SPH.UK +10% (to pursue
strategic options)
- Financials [ING Group INGA.NL
+1.2% (to expand digital banking, cut jobs), Santander SAN.ES +1.4% (appoints
new top mgmt)
- Telecom [TeleKom Austria
TKA.AT -0.4% (prices €1B capital raise)
- Technology [Advanced Computer
Software ASW.UK +15% (to be acquired)
- Consumer Discretionary
[Steinhoff International SHF.ZA +1.4% (to acquire Pepkor)
***Speakers***
- Eurogroup spokesperson planned meeting for Dec 1st to draft 2015 budgets was
being delayed again (**Note: This is the second delay in the European
Finance Minister meeting on 2015 budgets. Was delayed from Nov 21st)
- ECB's Coeure (France) stated
that ECB wants to have asset-buying discussion at Dec meeting and should be a
serious, principle-based discussion. It would not rush on decision and must
discuss all options on buying new assets and need to look at impact of existing
programs
- RBA's Lowe reiterated view
that AUD exchange rate was unusually high and noted that the currency should
fall when terms of trade and investment decline. Economy has challenges but was
strong
BOE Treasury Select Committee hearing
comments
- Gov Carney: Spare capacity has
fallen marginally over the past three months but total hours worked have been
weaker than expected. Wage growth risks broadly as expected
- Member Cunliffee stated that
that more worried about risk of inflation surprising again on the downside than
unexpected emergence of inflationary
pressure. Weak pay and inflation key reasons no change vote
- Member McCafferty (dissenter) Full capacity could be reached before
forecast and saw upside inflation risk if slack was absorb earlier
- Member: Forbes: Future rate
increases were likely to be gradual but added there could be less slack than
expected. She put more weight on stronger global economy
- (DE) German Bundesbank Financial
Stability Report noted that house prices in top 7 cities were overvalued by 25%.
Longer period of low interest rates increased risk of market exaggerations
- Japan GPIF pension fund post
July-Sept results: Overall return rate at 2.87%; earning ¥3.6T with Total
assets at ¥130.9T
- Japan Ruling LDP party unveils its
platform for the upcoming Dec 14th snap elections; To continue with bold
monetary easing
- Iran and Russia Presidents recently
spoke by phone to discuss oil markets and agreed to cooperate
***Currencies***
- The USD/JPY was off its Asian session lows of 117.80. the pair moved lower
after the meeting minutes from the controversial Oct 31st BOJ decision had some
members express concerns of a weak yen against small businesses.
- AUD/USD currency pair was at 4-year low at 0.8530 after RBA's Lowe reiterated
the view that the AUD exchange rate was unusually high
**Political/In the Papers:
- (CN) PBoC to drain CNY5B in 14-day repos (33rd consecutive drain, smallest
drain since May 2013); Offer yield at 3.2% v 3.4% prior (4th yield cut, prior
offer yield cut by 10bps to 3.4% from 3.5% on Oct 13th)
**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time
(Add 5 hours for GMT equivalent)
- (GR) Greece and Troika official to meet in Paris
- (EU) European budget reviews
- (BR) Brazil Oct Total Federal Debt (BRL): No est v 2.183T prior
- (PT) Portugal Year-to-Date Budget Report
- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-month Bills
- 06:45 (US) Daily Libor Fixing
- 07:00 (RU) Russia announces weekly OFZ bond auction
- 07:45 (US) ICSC Chain Store Sales
- 08:00 (HU) Hungary Central Bank (NBH)
Interest Rate Decision: Expected to leave Base Rate Decision unchanged at 2.10%
- 08:00 (ES) Spain Oct YTD Budget Balance: No est v -€33.1B prior
- 08:15 (US) Baltic Dry Bulk Index
- 08:30 (US) Q3 Preliminary GDP
Annualized Q/Q: 3.3%e v 3.5% advance; Personal Consumption: 1.9%e v 1.8%
advance
- 08:30 (US) Q3 Preliminary GDP Price Index: 1.3%e v 1.3% advance ; Core PCE
Q/Q: 1.4%e v 1.4% advance
- 08:30 (CA) Canada Sept Retail Sales M/M: +0.5%e v -0.3% prior; Retail Sales
Ex Auto M/M: +0.3%e v -0.3% prior
- 08:55 (US) Weekly Redbook Sales
- 09:00 (US) Sept FHFA House Price
Index M/M: 0.4%e v 0.5% prior; Q/Q: 1.0%e v 0.8% prior
- 09:00 (US) Sept S&P/ CaseShiller 20 City M/M: +0.30%e v -0.15% prior;
Y/Y: 4.60%e v 5.57% prior; House Price index: 173.28e v 173.66 prior
- 09:00 (EU) Weekly ECB Forex Reserves
- 10:00 (US) Nov Richmond Fed
Manufacturing Index: 16e v 20 prior
- 10:00 (US) Nov Consumer Confidence Index: 95.8e v 94.5 prior
- 10:00 (MX) Mexico Q3 Current Account Balance: No est v -$7.0B prior
- 10:00 (MX) Mexico Weekly International Reserves
- 10:00 Hungary Central Bank Gov Matolcsy post rate decision statement
- 10:30 (UK) DMO announces size of upcoming 2% 2020 Gilt auction
- 11:30 (US) Treasury to sell $13B in
2-Year Notes Reopening
- 11:30 (US) Treasury to sell 4-Week Bills
- 13:00 (US) Treasury to sell $35B in 5-Year Notes
- 13:00 (DE) German Chancellor Merkel delivers Speech at European
Family-Business Conference
- 14:00 (AR) Argentina Oct Trade Balance: No est v $404M prior
- 16:00 (KR) South Korea Nov Consumer Confidence: No est v 105 prior
- 16:30 (US) Weekly API Crude Oil Inventories
- 19:30 (JP) BOJ's Shirai in Hiroshina
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