Daily Musings and Music of a Euromarket Professional

Uncomfortable as it may be, being aware of sitting on a time bomb shouldn't keep us from being able to laugh about it - and to listen to some music!

Daily musings of a euromarket professional


Friday 21 December 2012

21 Dec 2012 – “ Blue Christmas ” (The Dread Zeppelin, 2002)


21 Dec 2012 – “ Blue Christmas ” (The Dread Zeppelin, 2002)

Trailing the US, as not much else to do. EGBs firming up, but mostly because they‘re supposed to do so, as Equities end a little softer, because they have to, as well. Credit likewise. So no Risk highs under the Xmas three… All because of the US. Blue.
"Blue Christmas" (Bunds 1,38% -4; Spain 5,23% +1; Stoxx 2644 -0,6%; EUR 1,318 -40)
---
In reversal of Wednesday’s close, Thursday ended on a positive note in the US, up about half a percent, as Fiscal Cliff issues seemed on the way of getting solved. Unfortunately, these hopes were then crushed after the markets closed, leading to a 1.5% drop in futures. 2012 in a day: Waiting for decisions that don’t come, although everyone guesstimates that it’ll go the right way. To make the 2012 replay really complete, we even had another mini flash crash, sending S&P futures down 3.5%, before rebounding. Ah, 2012…
Asia closed the week by and large in the red, following the US futures’ lead, anywhere between 0.25% and 1% lower.
Cyprus rating cut to CCC+ with negative outlook from B by S&P

Isn't it funny that the world is supposed to end on a quadruple-witching day for US markets? Then again, it is unclear at what time? EOD? Tulum time (East Coast), Kaminaljuyu (near the West Coast)?
Whatever…

Latest batch of macro data mixed, as well, to start the day: German Consumer Confidence about in line and trailing sideways (5.6 versus 5.9 forecast after rev. 5.8); Finnish unemployment jumping to 7.3% from 69%; French Biz Confidence rising to 89 from 88, as expected, Production Outlook better at -38 (fcst -42 after -40, rev. -42), but Own Production ticking down to -9 from -7; Spanish PPI lower than expected at 2.8% YoY (fcst 3.1% after rev 3.4%). INSEE growth outlook for France at odds with the government view, seeing 0.1% for 2013.

Start of day in light Risk Off mood, given the overnight developments, with equities opening about 0.50% lower, roughly in line with the US futures.
EGBs, of course, on the slightly firmer side, but not excessively so. Bunds -2bp back to 1.40%, others in line. Periphery some 1-2 softer. Classic. Credit mixed with Main a tick softer, Financials a tick firmer and Crossover 2% wider.
EUR down to below 1.32 from 1.325 Thursday night, but eventually settling in around 1.322, unchanged from yesterday’s close. Oil a bit softer and Gold half a percent firmer, right at 1650.
No roaring desperation, thus.

No government supply.
Finnish 2013 funding needs will be EUR 18.5bn, of which 70% in bonds. So again, not really the sovereign to flood the markets unduly.

New Issues market shut.

Cyprus bail-out / write-off questions doing rounds. Just to put things back into context: Cyprus’ GDP is shy of EUR 18bn (versus Greece’s EUR 208bn). Of course sustainability of its debt is in question, but the sums involved are a far cry from the ones that have been (and will be) spent on Greece or the other GIIPS peers. This one ought to be manageable by the EZ, if the proverbially fan gets hit…
Spain, by the way, is already massaging opinion that it WILL miss its 4.5% deficit targets for 2012 (…), knowing that YTD November figures are already at -4.37%.

Equities ticking a little lower by the end of the morning (-0.6%) with Core EGBs firming up, or vice versa. Periphery bonds softening, too, with Italy ticking wider. Soft Core flat.
Bunds 1,40% (-2), OBLs 0,36% (-2), BKOs -0,008% (-1). UST 1,76% (-3).
Spanish 2s 2,73% (-2), 10s 5,24% (+2). 2-10 YRS spread 251bp (+4).
Italian 2s 1,82% (+5), 10s 4,47% (+5). 2-10 YRS spread 265bp (unch).
EUR back right on the 32-handle.

Quite a positive data flow to kick off the afternoon with Chicago FED at +0.1 after -0.56, Personal Income & Spending +0.6% (twice the forecast), respectively +0.4% (fcst +0.3% after rev. 0.1% and +0.4% after rev. -0.1%) and Durable Goods up 0.7% (fcst +0.3% after rev. +1.1%) with the EX component jumping  1.6% (fcst -0.2% after rev. +1.9%).
Looks good, but not as good as Fiscal Cliff deal, hence next to no reaction at all.

US equities gapping down 0.75%-1%, knowing that the closing minutes yesterday pushed up stocks forcefully 0.25% higher. Let’s say limited damage with indices about 0.5% lower from European COB Thursday.

Michigan (Non) Confidence printed at 72.9 (fcst 75 after 74.5), quite a miss.

Bit of ROff end of day. No new European highs to put under the three… A bit blue. -0.4% is limited damage, though, and Credit about 2% wider is not surprising, given the tightest levels seen yesterday.
Note the surge just below 20 at open in the VIX (from a 7-day low at 15.5 on Tuesday).
EGBs (sluggishly) moving tighter, given the environment, but I’m not sure that this is really a convinced move. Classic ROff formation with Bunds -4, Hard Core -3, Soft Core -1, Belgium +1, as for Spain, and Italy the laggard at +5 in expectation of Monti’s official resignation tonight (and where’s the news in that?).
On the week, Bunds a bit softer at +3, the rest more or less unchanged, Belgium very tight at -6 and the Periphery brothers at -16 & -17. Spain again through 400 to Bunds, but still struggling to break 5.15%-5.25%.
Bunds closed at 1,38% (-4), OBLs at 0,35% (-4) and BKOs -0,010% (-1,3). UST at 1,75% (-4) COB.
Spanish 2s at 2,73% (-2), 10s at 5,23% (+1). 2-10 YRS spread 250bp (+3).
Italian 2s at 1,84% (+7), 10s at 4,47% (+5). 2-10 YRS spread 263bp (-2).
Greeks shedding some of the latest gains with 2023s at 49.50 (-50 to 11.60% +13bp) and 2042s likewise minus 50 ticks to 37.00 (10.21% +12bp 10.09%). Still, one must bow to a nice weekly move, as they closed last Friday at 45.0 (12.83%) and 34.0 (10.90%), and the previous week at 40.75 (14.15%) and at 31.0 (11.71%). And Xmas is only in January in Greece.
Portuguese 10s unchanged at 6.89%.
EUR softer during the afternoon on ROff (and US figures fundamentally looking better). Metals dump by Mayan hedge funds over with Silver recovering, Gold up over 1% and Copper following. Oil 1% softer. Mixed picture.
Still watching the Baltic Dry getting wacked on a daily basis and getting itchy seeing my coalmine canary getting so pale. Repeat. Repeat. Repeat.

Take-away: Trailing the US, as not much else to do. EGBs firming up, but mostly because they‘re supposed to do so, as Equities end a little softer, because they have to, as well. Credit likewise. So no Risk highs under the Xmas three… All because of the US. Blue.

I wish all readers a festive holiday season and all the Best for 2013 (Mayans permitting).

European 50 & 100d averages: EStoxx 2543/2513, DAX 7342/7247, CAC 3505/3480, MIB 15647/15494, IBEX 7860/7738.
US 50, 100 & 200d averages: INDU 13097/13193/13011, S&P 1414/1419/1389, NASDAQ 2987/3033/2991 with AAPL at 575/616/601.
EUR: 50d 1.295, 100d 1.283 & 200d 1.279. Fibo retracement (of May 2011 1.494 to Jul 2012 1.204 down-leg) at 1.273 & 1.315, then 1.349 (50%).

---

Closing levels:
10 YRS Yields: Germany 1,38% (-4); Luxembourg 1,42% (-3); Netherlands 1,56% (-3); Finland 1,58% (-5); EU 1,60% (-3); Swaps 1,62% (-2), Austria 1,75% (-1); EIB 1,76% (-3); EFSF 1,85% (-2); France 1,98% (-1); Belgium 2,05% (+1); Italy 4,47% (+5); Spain 5,23% (+1).

10 YRS Spreads: Luxembourg 4bp (+1); Netherlands 18bp (+1); Finland 20bp (-1); EU 22bp (+1); Swaps 24bp (+2); Austria 37bp (+3); EIB 38bp (+1); EFSF 47bp (+2); France 60bp (+3); Belgium 67bp (+5); Italy 309bp (+9); Spain 385bp (+5).

EUR swap curve 2-5 YRS 42bp (-3,0); 5-10 YRS 81bp (unch) 10-30 YRS 66bp (unch).
2 YRS German BKOs closed -0,010% (-1,3) and 5 YRS OBLs 0,35% (-4).

Main +2 to 111 (1,8% wider); Financials +3 to 138 (2,2% wider); Cross +12 to 457 (2,7% wider).
Stoxx Futures at 2644 / -0,4% (from 2655) with S&P minis at 1421 (-0,9% from 1434, at European close).
VIX index at 18,9 after 17,2 yesterday same time.

Oil 88,4/108,8 (WTI/Brent) from 89,6/110,0 (-1,3%/-1,0%). Gold at 1657 after 1639 (+1,1%). Copper at 356 from 353 (+0,8%). CRB at EU COB 294,0 from 296,0 (-0,7%).
Closing a fourth week of continuous consolidation in the Baltic Dry, down to 700 from 708 (-1.1% on the day and -10.7% on the week). I reckon 661 and 647 next stops:
The latest dip from the post-Summer high of 1109 in Oct had been halted at 916, before that we slipped from 1162 in July to 661 mid-September. 21st century low was 647 in Feb 2012. Upcoming Chinese New Year (10 Feb 2013)… Seems a little far, no?

EUR 1,318 from 1,322

Greeks shedding some of the latest gains with 2023s at 49.5 (-50 to 11.60% +13bp) and 2042s likewise minus 50 ticks to 37 (10.21% +12bp 10.09%). Still, one must bow to a nice weekly move, as they closed last Friday at 45.0 (12.83%) and 34.0 (10.90%), and the previous week at 40.75 (14.15%) and at 31.0 (11.71%). And Xmas is only in January in Greece.

All levels COB 17:30 CET

Fast-forward Macro and Events:
Dragging into Year End. For obvious reasons, an ultra-light slate next week…

EZ: No data next week.
GE: No data next week.
FR: Thu 27 Dec Cons Confidence, PPI, Claims, Q3 GDP revision
Italy: Thu 27 Dec Biz Confidence, Fri 28 PPI
Spain: Thu 27 Dec Mortgages; Fri 28 Retail Sales
US: Wed 26 Dec Case Shiller; Thu 27 Claims, Cons Conf, New Homes Sales; Fri 28 Pending Home Sales

Click link under title or below for today’s musical support:
Definitively the right time to dig and unearth some more Xmas rock songs…
And I know you’ll like THAT


---

A View From My Screens in its daily format will be put on hiatus, at least for a while.
I hope my posts brought some insights and information and were somehow useful to you, next to the discovery of musical titles you might never have heard of before or had forgotten existed.

I thank all the readers, who bore with my musical choices, be it directly on my own site and later through the mirrors on Zerohedge, the FTAlphaville Long Room as well as the Minyanville blog section and thank these sites for offering me such a broad platform.

It has been gratifying, journalistically satisfying as well as simply flattering being read so regularly, but I’m looking for more time to deepen next steps, which is not compatible with being stuck behind my screens.

Should you miss my posts, I’d be certainly saddened, but glad to hear about it. Let me know.

Any suggestion about how to make aviewfrommyscreens.com part of a broader project or how to leverage its content or my experience would be warmly welcome. Any other advice would be certainly welcome, too.

Healthy, Happy & Successful 2013!!!

As usual:


Thursday 20 December 2012

20 Dec 2012 – “ Merry Christmas (I Don't Want To Fight Tonight) ” (The Ramones, 1989)


20 Dec 2012 – “ Merry Christmas (I Don't Want To Fight Tonight) ” (The Ramones, 1989)

EGBs and Equities rather a side-story today, as mainly static. EUR, too. Spain ticking in. Italian 2s on new lows (with the old reference nearing 1.5%). Good US GDP, bad Gold Dump Party (GDP, too). Worse Silver sell-out. Metal weakness? Maybe the Mayans are getting rid of their stocks before tomorrow? Another shy EStoxx high and Risk low. Don’t fight (the trend)…
"Merry Christmas (I Don't Want To Fight Tonight)" (Bunds 1,42% unch; Spain 5,22% -3; Stoxx 2661 +0,1%; EUR 1,322 -40)
---
The carefree drift couldn’t last forever, could it? “No news, good news, until proven otherwise, and a reason to tick ever higher” was (only slightly, though) derailed last night after initial compromise talks on the Fiscal Cliff soured with alternative plans prioritized. Bah. Made for a -0.75% close, which in itself doesn’t look devastating, but, given the size of movements lately, is a very visible red.
No real follow-up into the Asian session, though. Nikkei down 1% after the month-long rally. Most other Asian places rather up 0.3-0.5%.
Italian elections slated for 24 Feb with Monti to address the nation over the weekend.
The Greek FinMin speaking in the FT of “Make or Break 2013” with a very honest assessment that “the break would be if the political system finds the situation too difficult to handle”, which could lead to bankruptcy and Grexit. That seems more like a programme to me… At some stage, if the 50%-plus unemployment can’t be resolved, someone might just pull the plug on paying those debts and suggest that a Drachma re-introduction cum default might be a more realistic way to handle things. I personally do believe this.

No major data on the plate. German PPI pretty much as expected at -0.1% MoM / +1.4% after 1.5% YoY. Spanish Housing Permits at -34.3% YoY after -51.6%. Dutch tristesse with Nov Unemployment ticking up to a round and unprecedented 7% (from 6.8% and a 3.7% low in Aug 2008), the highest since pushing Dec Consumer Confidence to -39 from -37, with Oct Spending down 2.4% YoY. Italian Retail Sales under consensus of being unchanged, down 1% MoM after -0.1% / -3.8% after -1.6% YoY.

European open hence on the cautious side, down from yesterday’s yet another lofty highs. Equities down 0.5%. EUR back well through the 1.33 flashed yesterday at 1.323. EGBs flattish, a bit firmer in the Soft Core with France back through 2%. EUR curve flat.
Bunds 1.42% (unch) and UST likewise unchanged at 1.78%
Periphery 2bp softer, in rather Pavlovian manner, given the softer Risk environment. Credit 2% wider from yesterday’s tight close. Commodities all about a quarter softer.
Greek bonds undeterred by whatever the Greek FM might have said.

But why so pessimistic? About 90 minutes into the session, equities ticked back up to their closing levels and all were friends again.
EGBs about static…

No government supply.
German 2013 funding plans showing a slight decrease to EUR 250bn, of which EUR 173bn in bonds, from EUR 255bn this year. 2012 average funding costs were a mere 0.56% with total outstanding costs running at 3.6%. Q1 will see EUR 65bn, split EUR 44bn bonds / EUR 21bn bills. Same for Q2. Q3 EUR 43bn +20bn. Q4 EUR 42bn +15bn.
One “Germany Bond” to be sold next year (joint Bund / Länder issue), although the subject remains far from clear with some Länder already announcing not to opt in these deals. Looks already like a potential dog, trading in-between Bunds, KfW bonds and German Länder jumbos… Introduction of CAC.
French 2013 funding plans released in Tango with EUR 169bn of medium and long term bonds on the chop. CACs from Feb 2013 on. New lines to have May and November maturities.

New Issues market dormant.
By mistake, I put yesterday’s 1 YR BNPP deal at EUR 1bn, although it ended up only a mere EUR 300m. So basically more a money-market operation cum private placement. To be forgotten. Market is pretty much closed.

Risk recovering step by step throughout the end of the morning into the afternoon, but forensic movements…

Kicking off the afternoon with the latest US Q3 GDP revision wringing out a much better than expected 3.1% QoQ annualized (revision forecast was for 2.8% after 2.7%). Claims about on consensus at 361k (fcst 360k after 343k, rev. 344k) and slightly higher Continuous ones seen at 3225k (fcst 3200k after 3198k, rev. 3213k).
Not much GDP excitement, though; confirming European equities in the green, but just so. EUR drifting back up, bizarrely, but probably simply flow-driven. Gold weaker again, trading down to 1350s (with Silver down 3.5% and down over 10% from an intermediate rebound to 33.7 Wednesday one week ago).
Nice set of numbers to end macro supply for the day with Existing Homes sales for Nov at 5.04m (fcst 4.90m after rev. 4.76m) and Philly Fed very strong at +8.1 (fcst -3 after -10.7). Markets focused on Fiscal Cliff non-resolution and wondering at what time Obama is supposed to fly to Hawaii tomorrow evening (…).

Just so much pressure on equities to pin Europe back to yesterday’s closing levels (and the US 0.75% below European COB) and pinch EGBs a little tighter across the board with Spain the lead (-6), Italy the laggard at +1, Belgium on the ramp (-6), Soft Core (-3) and then Hard Core (-1).

Static dramatic. Boredom in disguise. Periphery split with Italy stuck at 300 to Bunds, but Spain tackling again year lows in 10s. Short Italians fine, though, with the former 2 YRS reference moving towards 1.50%. Belgium sneaking up from behind and tightening in further to France, having to hide back below 2% in order not to be overtaken.
Greeks stabilizing over the moon with 2023s at 50.0, unchanged after yesterday 500 ticks surge, (11.47%) and 2042s adding 50 ticks to 37.50 (10.09% -11bp), after yesterday’s +275. Interesting (but that’s for next year) to have discussions about the IMF asking (realistically) a Cyprus haircut before assistance… But, that ought to be haggled out next year.
Equities just so slightly green. Credit again a couple of ticks lower, though. Careful, on a final squeeze the Main will hit 100 by the end of the year.
Bunds closed at 1,42% (unch), OBLs at 0,38% (unch) and BKOs 0,003% (+1), in positive territory. UST at 1,79% (+1) COB.
Spanish 2s at 2,75% (-6), 10s at 5,22% (-3). 2-10 YRS spread 247bp (+3).
Italian 2s at 1,62% (-3), 10s at 4,42% (+4). 2-10 YRS spread 280bp (+7).
Portuguese 10s at 6.89%, unchanged.
Equities eking out 0.1% and yet another high at arggghh lift lift 2662 (+1)(tick).
EUR running out of steam after being bid in the early afternoon. Metals wacked with Gold down 2% past 1650, Silver down over 4.5% and Copper 1.7%. Maybe Mayans are getting rid of their stocks before tomorrow?
Still watching the Baltic Dry getting wacked on a daily basis and getting itchy seeing my coalmine canary getting so pale. Repeat.

Take-away: EGBs and Equities rather a side-story today, as mainly static. EUR, too. Spain ticking in. Italian 2s on new lows (with the old reference nearing 1.5%). Good US GDP, bad Gold Dump Party (GDP, too). Worse Silver sell-out. Metal weakness? Maybe the Mayans are getting rid of their stocks before tomorrow? Another shy EStoxx high and Risk low. Don’t fight (the trend)…

Outlook: Same. Sideways with an upwards bias, subject to Fiscal Cliff discussions.
Just the saaaaaaaaaaaame – until Santa comes. Or the Mayans. Tomorrow. Or not.
Consumer confidence in German and Italy, Biz Confidence in France, all expected about unchanged a tick better.
Busier US with Chicago FED last -0.56, Personal Income & Spending fcst +0.3% after 0% and +0.4% after -0.2%, Durable Goods fcst +0.3% after rev. +0.5%/ EX -0.2% after rev. +1.8%, Michigan Confidence fcst 75 after 74.5.

European 50 & 100d averages: EStoxx 2539/2509, DAX 7334/7237, CAC 3500/3476, MIB 15631/15469, IBEX 7849/7719.
US 50, 100 & 200d averages: INDU 13103/13190/13009, S&P 1414/1418/1389, NASDAQ 2988/3033/2990 with AAPL at 578/617/601.
EUR: 50d 1.295, 100d 1.282 & 200d 1.279. Fibo retracement (of May 2011 1.494 to Jul 2012 1.204 down-leg) at 1.273 & 1.315, then 1.349 (50%).


Closing levels:
10 YRS Yields: Germany 1,42% (unch); Luxembourg 1,45% (-1); Netherlands 1,59% (-3); Finland 1,63% (-1); EU 1,63% (-1); Swaps 1,64% (-1), Austria 1,76% (-1); EIB 1,79% (-2); EFSF 1,87% (-2); France 1,99% (-2); Belgium 2,04% (-6); Italy 4,42% (+4); Spain 5,22% (-3).

10 YRS Spreads: Luxembourg 3bp (-1); Netherlands 17bp (-3); Finland 21bp (-1); EU 21bp (-1); Swaps 22bp (-1); Austria 34bp (-1); EIB 37bp (-2); EFSF 45bp (-2); France 57bp (-2); Belgium 62bp (-6); Italy 300bp (+4); Spain 380bp (-3).

EUR swap curve 2-5 YRS 45bp (unch); 5-10 YRS 81bp (-1,0) 10-30 YRS 66bp (-1,0).
2 YRS German BKOs closed 0,003% (+1) (Ooops! Positive!) and 5 YRS OBLs 0,38% (0).

Main -1 to 109 (-0,9% tighter); Financials -3 to 135 (-2,2% tighter); Cross +1 to 445 (0,2% wider).
Stoxx Futures at 2661 / +0,1% (from 2658) with S&P minis at 1434 (-0,5% from 1441, at European close).
VIX index at 17,2 after 16,5 yesterday same time.

Oil 89,6/110,0 (WTI/Brent) from 89,8/110,1 (-0,2%/-0,1%). Gold at 1639 after 1672 (-2,0%). Copper at 353 from 359 (-1,7%). CRB unch at 296 EU COB.
Daily Wack the Balt! Purge on-going and confirming a fourth week of consolidation, down to 708 (-1.7%). I reckon 661 and 647 next stops soon.
The latest dip from the post-Summer high of 1109 in Oct had been halted at 916, before that we slipped from 1162 in July to 661 mid-September. 21st century low was 647 in Feb 2012. Upcoming Chinese New Year (10 Feb 2013)… Seems a little far, no?

EUR 1,322 from 1,326

Greeks stabilizing over the moon with 2023s at 50.0, unchanged after yesterday 500 ticks surge, (11.47%) and 2042s adding 50 ticks to 37.50 (10.09% -11bp), after yesterday’s +275.

All levels COB 17:30 CET

Fast-forward Macro and Events:
Dragging into Year End. For obvious reasons, an ultra-light slate next week…

EZ: No data next week.
GE: Fri Consumer Confidence fcst 5.9 unch. No data next week.
FR: Fri Biz Confidence fcst 89 after 88. Thu 27 Dec Cons Confidence, PPI, Claims, Q3 GDP revision
Italy: Fri Consumer Confidence fcst 85.1 after 84.8; Thu 27 Dec Biz Confidence, Fri 28 PPI
Spain: Fri PPI -0.2% after -0.1% MoM; Thu 27 Dec Mortgages; Fri 28 Retail Sales
US: Busy Friday with Chicago FED, Personal Income & Spending fcst +0.3% after 0% and +0.4% after -0.2%, Durable Goods fcst +0.3% after rev. +0.5%/ EX -0..2% after rev. +1.8%, Michigan Conf fcst 75 after 74.5; Wed 26 Dec Case Shiller; Thu 27 Claims, Cons Conf, New Homes Sales; Fri 28 Pending Home Sales

Click link under title or below for today’s musical support:
Definitively the right time to dig and unearth some more Xmas rock songs…
And I know you’d like THIS from the same album probably more…Less festive. More fun, though.


Wednesday 19 December 2012

19 Dec 2012 – “Oh Come All Ye Faithful ” (Twisted Sister, 2006)


19 Dec 2012 – “Oh Come All Ye Faithful ” (Twisted Sister, 2006)

Would be easy to call this boring, given the state of the market and volumes, but undercover Risk On definitively there. Greek 10s over the moon and far away (up 500 ticks)… Strong EUR. Seems a little easy, but who wants to fight? It’s Yule Time – at least until Friday, then we’ll see what the Mayans really meant.
"Oh Come All Ye Faithful" (Bunds 1,42% +0; Spain 5,25% -4; Stoxx 2658 +0,4%; EUR 1,326 +40)
---
Another good US close on Tuesday with the S&P adding yet another 1%, as FC discussions seem bound the right way. NASDAQ close shy of 1.5% and all indices closing pretty much HOD. Even Apple is eventually getting greener, too, up 2.90%.
Asia seems to be stuck in a year-end drift as well, positively cautious up 0.5% on average. Shanghai flat. Japan roaring ahead, closing well over 2%, now up nearly 11% from last month.
S&P Upgrading Greece from Selective default all the way up to B-, knowing that that this was less because of the intrinsic values and virtues of Greece, but because of the proven strong EZ support.

No data to kick off the day.

End of year drift. What can one expect? Tendency is to slightly higher risk, but with no impetus for a furious rally.
EGBs by and large flat to kick-off the day after a slightly wobbly start. Bunds 1.42% unchanged with UST finally coming in 1 bp to 1.80%. Nothing else really changed. Periphery quiet.
Equities a couple of ticks better, but just a couple, flashing a light green. Credit unchanged on its lowest level in ages. Commodities about unchanged, if it wasn’t for Gold ticking lower by the day (1674). EUR once more a bit firmer at 1.324.

German IFO mixed, but with a final number just fine enough to keep things balanced: Business Climate a tick better than expected at 102.4 (fcst 102 after 101.4), Current Assessment a little bleak at 107.1 (fcst about unchanged at 108.0 after 108.1), but with a better expectation component at 97.9 (fcst 96.4 after 95.2). Confirms the mood and latest figures: Q4 is in the dumps, but everyone (and all equity buyers) is convinced that things will firm up next year.
Italian Industrial Orders sluggish at 0% MoM sa (fcst +1% after -4%) and Industrial Sales at -0.2% MoM sa after -4.2%.
Finally, unlike in the US, it won’t be Construction that will pull Europe out of the ditch with Output down 4.1% YoY wda (after -2.6%, revised lower to -3.8%) / -1.6% MoM sa after -1.3%.

Bah. Whatever. Figures were all good enough for little bit of ROn during the rest of the morning. Equities up 0.5%, EGBs 1 bp softer and the Periphery ticking tighter.

No government supply.
New Issues market dormant, outside BNPP printing a EUR 1bn 1YR-bond at 3mE +28.

Not much to mention with the midday picture about static on all counts, expect for Greek bonds
Equities up a small 0.5%. Credit flat.
Bunds 1,43% (+1), OBLs 0,39% (unch), BKOs -0,008% (-0,5). UST 1,81% (unch).
Spanish 2s 2,82% (-1), 10s 5,26% (-3). 2-10 YRS spread 244bp (-3).
Italian 2s 1,66% (-6), 10s 4,38% (-7). 2-10 YRS spread 272bp (-1).
EUR still pushing ad push at 1.327. Oil up a small 1% with Gold down 1% to 1668.
Greek 2023s at 48.25 +325 (11.92% -92bp) and 2042s +275 at 37.00 (10.20% -64bp)!!! Wow, all because of S&P putting it back to B-???

EUR ticking slightly over 1.33 ahead of the US open, highest since breaking down in an epic move on 04 Apr (Hi 1.334 Lo 1.311, after FED minutes showed Big Ben then no yet ready for QE3, Supa Mario then not unleashing magic yet and Spain widening over a quarter on a yet again botched auction).
So, back to the future? Not on all counts: Bunds then 1.80%, but Spain spread to Bunds 389, Main then 130, Gold trampled from 1672 down to 1616 that day, Brent at $123 and CRB 306, S&P then 1400, EStoxx 2400… Some things change, some don’t…
Kicking off the afternoon with the only US figures for the day with Housing Starts falling more than expected to 861k (fcst 873k after 894k, rev. a lucky 888k), although Building Permits rose to 899k (fcst 870k after 868k). Put the blame for not starting on Sandy. That should do…

Talking of Spain, its bad bank SAREB is supposed to issue next week (to whom?) and Rajoy has decided not to decide on an a bail-out (for the moment), which he boasts is a decision.

Plan A, B, C, D juggling in the US a little unnerving and keeping US indices close to home and capping European exuberance.
Treasuries and EGBs firming up just a little on back of that.
Periphery firming, kicking Soft Core yields back tighter.

And that’s it, folks… Still won’t get more exciting in the coming days.

Risk On in disguise on-going with the Main closing at 110. Soft Core EGBs on the ramp with Belgium zooming close to its all-time low of 10 days ago and closing in on France (9 bp spread)(Maybe because the wealth French tax exiles are seen bringing to the country???).
Greeks now over the moon with especially 2023s at 50.0 +500 points (11.46% -138bp) and 2042s +275 at 37.00 (10.20% -64bp)!!!
Bunds closed at 1,42% (unch), OBLs at 0,38% unch) and BKOs -0,008% (-0,5). UST at 1,78% (-3) COB.
Spanish 2s at 2,81% (-2), 10s at 5,25% (-4). 2-10 YRS spread 244bp (-3).
Italian 2s at 1,65% (-7), 10s at 4,38% (-7). 2-10 YRS spread 273bp (unch).
Portuguese 10s at 6.89%, 11bp tighter.
Equities eking out another 0.5% and another high at 2661.
EUR still riding (ever) high(er). Commodities mixed again with Oil split up (WTI 2% and Brent 1.2% to just over $110), Gold softer and especially Copper losing some shine at 359 (-1.6%).
Still watching the Baltic Dry getting wacked on a daily basis and getting itchy seeing my coalmine canary getting so pale.

Take-away: Would be easy to call this boring, given the state of the market and volumes, but undercover Risk On definitively there. Greek 10s over the moon and far away (up 500 ticks)… Strong EUR. Seems a little easy, but who wants to fight? It’s Yule Time – at least until Friday, then we’ll see what the Mayans really meant.

Outlook: Same. Sideways with an upwards bias, subject to Fiscal Cliff discussions.
Just the saaaaaaaaaaaame – until Santa comes. Or the Mayans.
We will have yet another revision of US Q3 GDP with an uptick to 2.8% QoQ seen. Claims forecast 360k after 343k and Continuous ones seen at 3200k after 3198k, Existing Homes sales for Nov fcst 4.90m after 4.79m, Philly Fed fcst -3 after -10.7

European 50 & 100d averages: EStoxx 2535/2506, DAX 7325/7228, CAC 3494/3472, MIB 15614/15445, IBEX 7837/7704.
US 50, 100 & 200d averages: INDU 13110/13187/13007, S&P 1414/1417/1388, NASDAQ 2990/3031/2989 with AAPL at 580/618/601.
EUR: 50d 1.294, 100d 1.281 & 200d 1.279. Fibo retracement (of May 2011 1.494 to Jul 2012 1.204 down-leg) at 1.273&1.315, then 1.349 (50%).


Closing levels:
10 YRS Yields: Germany 1,42% (unch); Luxembourg 1,46% (+1); Netherlands 1,62% (-1); Finland 1,64% (unch); EU 1,64% (+1); Swaps 1,65% (+1), Austria 1,77% (-4); EIB 1,81% (+1); EFSF 1,89% (unch); France 2,01% (-3); Belgium 2,10% (-7); Italy 4,38% (-7); Spain 5,25% (-4).

10 YRS Spreads: Luxembourg 4bp (+1); Netherlands 20bp (-1); Finland 22bp (unch); EU 22bp (+1); Swaps 23bp (+1); Austria 35bp (-4); EIB 39bp (+1); EFSF 47bp (unch); France 59bp (-3); Belgium 68bp (-7); Italy 296bp (-7); Spain 383bp (-4).

EUR swap curve 2-5 YRS 45bp (unch); 5-10 YRS 82bp (unch) 10-30 YRS 67bp (unch).
2 YRS German BKOs closed -0,008% (-0,5) and 5 YRS OBLs 0,38% (unch).

Main -1 to 110 (-0,9% tighter); Financials -1 to 138 (-0,7% tighter); Cross -1 to 444 (-0,2% tighter).
Stoxx Futures at 2658 / +0,4% (from 2647) with S&P minis at 1441 (+0,3% from 1437, at European close).
VIX index at 16,5 after 15,5 yesterday same time.

Oil 89,8/110,1 (WTI/Brent) from 88,0/108,8 (+2,0%/+1,2%). Gold at 1672 after 1685 (-0,7%). Copper at 359 from 365 (-1,6%). CRB at EU COB unch at 296,0.
Wack the Balt! Daily slide. Baltic Dry purge on-going and confirming a fourth week of consolidation, down another 3% to 720. I reckon 661 and 647 next stops soon.
The latest dip from the post-Summer high of 1109 in Oct had been halted at 916, before that we slipped from 1162 in July to 661 mid-September. 21st century low was 647 in Feb 2012. Upcoming Chinese New Year (10 Feb 2013)… Seems a little far, no?

EUR 1,326 from 1,322

Greeks now over the moon with especially 2023s at 50.0 +500 points (11.46% -138bp) and 2042s +275 at 37.00 (10.20% -64bp)!!!

All levels COB 17:30 CET

Fast-forward Macro and Events:
Preciously few things… Dragging into Year End, unless next Friday proves the Mayan right.
Big Friday US data dump.

EC: Thu Cons Confidence. No data next week.
GE: Thu PPI fcst -0.2% after flat MoM; Fr Consumer Conf fcst 5.9 unch. No data next week.
FR: Fri BIZ Confidence fcst 89 after 88. Thu 27 Dec Cons Conf , PPI, Claims, Q3 GDP revision
Italy: Thu Retail Sales fcst flat after +0.1% MoM sa; Fri Consumer Conf fcst 85.1 after 84.8; Thu 27 Dec Biz Confidence, Fri 28 PPI
Spain: Thu Housing Permits prior -51.3% YoY, Fri PPI -0.2% after -0.1% MoM; Thu 27 Dec Mortgages; Fri 28 Retail Sales
US: Thu Existing Homes Sales fcst 4.90m after 4.79m; Claims and yet another Q3 GDP revision; Big Friday with Chicago FED, Pers Income & Spending fcst +0.3% after 0% and +0.4% after -0.2%, Durable Goods fcst +0.3% after rev. +0.5%/ EX -0..2% after rev. +1.8%, Michigan Conf fcst 75 after 74.5; Wed 26 Dec Case Shiller; Thu 27 Claims, Cons Conf, New Homes Sales; Fri 28 Pending Home Sales

Click link under title or below for today’s musical support:
Definitively the right time to dig and unearth some more Xmas rock songs…

Of course, I know you're longing for THAT alternative.