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


Thursday, 15 March 2012

15 March 2012 – “The Ides of March” (Iron Maiden, 1981)


Nothing exciting outside the title, I’m afraid. Flat US open, flat Asian session, flat European open. No data to chew on, no major drama, positive nor negative. We noted a further bout of weakness at the open in Core EZ+ bonds, which came and went, came again and ended once the USD session started on a slight back foot. Equities on equilibrium for most of the morning.
What came out on European data was sad at best: EU car registrations down 9.7% in Feb, EZ employment a tad lower, labour costs higher than expected at +2.8% (YoY, vs. 2.5% fcst). In the European periphery things are still tense: Spanish house prices crashing (-11.2% YoY), Greek Q4 unemployment has shot up to 20.7%, Italian government debt is at an all-time high at EUR 1.935bn.
All rather non-enjoyable news, but, markets have become pretty blasé with regards to bad news. Still, Bunds tanked, as did UST in late US trading yesterday. Bit of bond recovery at US flat open, but thing mostly unchanged despite US figures that were all a tick better than expected. Then again, given the levels attained, markets will need real hard positive news to lurch further forward.
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The Spanish EUR 3bn auction fared well. Yield about unchanged, smaller sizes for 3 tranches, higher BC ratio. But tails of 20 cts and more showed quite a discount between average price and lowest accepted yields. Still, no sweat. France’s auction went without hick-up, too, for EUR 8.5bn of 5 YRS, as well as 2 and 4 YRS. 5s at 1.78% against last month’s 1.93% result. Limited excitement. LTRO still a balsam for periphery debt.
Oh, and the IMF signed off EUR 28bn for Greece. Still exactly haven’t heard who gaps what’s missing.
Fitch putting the UK on negative outlook? Bah. Those 100-year bonds will just be issued some other time…No more weaker than Bunds.

New issues pretty much as uninspiring as the rest.  EUR 1bn 10 YRS BNPP in covered is noticeable, as this would be the first French 10 YRS CB deal in a while coming in the double digit area. Bits and pieces on the SSA side, but nothing major.
We noted Comunidad de Madrid announcing some 3 YRS (Mmmh. LTRO!). Would be the first public Spanish regional deal in ages. Another sign of market normalization.

As expected, ECB deposits came down to EUR 686bn (from EUR 816bn) with the start of the new reserve maintenance period.
VIX 15.3. What else in a non-volatile world?
Oil static to a bit lighter at 105.6 / 124.2 for WTI and Brent (from 106/126) until rumours of concerted US and UK emergency oil stock releases cost a dollar to both, closing 104.4 / 123. Gold steadily sideways at 1648.
Baltic Dry again up 1.3% to 866. Daily rise and shine.

10 YRS yields: Germany 1.98% (+3 bp), Swaps 2.38% (+1 bp), Finland 2.40% (+4 bp), Luxemburg 2.41% (+1), Netherlands 2.48% (+5 bp), Austria 2.90% (+3 bp), France 2.96% (+4 bp), EFSF 3.20% (), Belgium 3.33% (-5 bp), Italy 4.86% (+2 bp), Spain 5.17% (+2 bp)
Spreads: Swaps +39 (), Finland +43 (+2), Luxembourg +43 (-1), Netherlands +51 (+3), Austria +93 (+1), France +98 (+1), EFSF +122 (-3), Belgium +136 (-7), Italy +288 (-1), Spain+320 ().
Bit of 10 YRS Bund rock ‘n roll and yo-yo, but something gotta move. Belgium and Italy holding best.

Uh. It feels really too quiet out here.
In order to fill the blanks and honour the day: Who is here so base that would be a bondman? (Shakespeare, Julius Cesar, 3.2.31).
Ok, it’s slightly taken out of context, but always good to drop a quote here and there. And I need to counterbalance the musical choice of the day to maintain reputation. Bondman, slave, bond dealer, financier. Otherwise, just ask Greg.

Friday: Again nothing major in Europe on the data front. US CPI (ex +2.2% fcst), IP (+0.4% fcst) , Capacity (78.8% fcst), Michigan confidence (76 fcst).

Click link on title or below for today’s musical support:


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