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

Monday 7 May 2012

07 May 2012 – "After the Storm" (Mumford & Sons, 2009)

07 May 2012 – "After the Storm" (Mumford & Sons, 2009)

Quick post-election update

Ouch! That was a rocky start on the back of the French and especially Greek election results. Asia tanking big time, as catching up on negative Friday European and US sessions and pre-empting stress in Europe (Nikkei down 2.8%, HS likewise -2.6%).

German Factory orders eventually better than expected at -1.3% YoY (after -6.1%, revised to -6%) and expected -2.8%. On the softer side, and in the long list of soft Southern European data, Spanish Industrial output at -7.5% YoY, had been expected at -5.3% after -5.1%. The increasing speed of the deterioration of the Spanish economy is worrying.
Sentix investor sentiment falling to a dismal -24.5 (had been expected -15.3, after -14.7). This is taking us through last December depressed levels and back to post-summer 2009 levels. Ouch!

Had a fierce initial sell-off in equities, risk, the periphery, France with 10 YRS Bunds falling to a yet unprecedented 1.56%, before things steadily improved.

Had Holland selling EUR 1.2bn 3m and 1.4bn 6m bills at 0.004% and 0.035% (hence next to nothing), after last month’s 0.017% and 0.041%. France as well on the bills front with EUR 4bn 3m at 0.082% after 0.0088%, EUR 1.8bn 6m at 0.114% after 0.101% and EUR 2.2bn 12m at 0.174% after 0.205%.

US figures limited to minor consumer credit data. Strong equity squeeze in the afternoon, in absence of real bad (further) news. So, then again, with the UK closed, today’s closing levels will need to be revisited tomorrow and Wednesday, when everyone’s back on board.

In the meantime, the political situation in Greece might have become clearer – or not. EUR exit possibilities have certainly increased and the knock-on effect on the rest of the periphery should certainly not been underestimated.
Spain mulling to recap its banks, once more. With which money is not exactly clear. In the meantime, another week without ECB SMP buying.

Closing levels:

10 YRS Yields: Germany 1,60% (+2); Luxembourg 2,05% (+2); Swaps 2,07% (unch); Finland 2,09% (+2); Netherlands 2,15% (+0); Austria 2,67% (-2); France 2,79% (-3); EFSF 2,89% (0); Belgium 3,14% (-4); Italy 5,38% (-5); Spain 5,71% (-1).

10 YRS Spreads: Luxembourg 45bp (unch); Swaps 49bp (-1); Finland 48bp (unch); Netherlands 54bp (-1); Austria 107bp (-3); France 119bp (-5); EFSF 129bp (-2); Belgium 154bp (-6); Italy 378bp (-6); Spain 411bp (-2).

EUR swap curve 2-5 YRS 46bp (+4,2); 5-10 YRS 72,1bp (-2,8) 10-30 YRS 34,8bp (+0,5).
2 YRS German BKOs closed 0,10% (+1) and 5 YRS OBLs 0,58% (+3).

Main at 144 from 144 (-0,2%); Financials at 243 after 244 (-0,7%). SovX at 275 from 273. Cross at 653 from 654. Much tamer action than in equities.

Stoxx Futures at 2247 / +1,7% (from 2209) with the S&P at 1369 (-0,5% from 1375, at European close). Odd equity traders...
VIX index at 19,2 after 18,6 yesterday same time.

EUR 1,305 after 1,310. Had traded through 30 handle in early morning.

ECB deposits still a heavy EUR 802bn after EUR 806bn from. Highest ever were EUR 827.5bn early March, just after LTRO2 was paid out. Only had overall 8 readings above EUR 800bn. So what was the question about the utilization of the LTRO cash? No trickling into the economy yet… Bah, let’s wait a bit longer. Then again, we’re nearing the end of the reserve maintenance period on 08 May (Wed). Were at EUR 788bn at the end of the last reserve maintenance period and then had a EUR 135bn drop. EUR 130bn the month before. Still, this piling up of money seems

Oil 97,8/113,0 (WTI/Brent) from 99,5/113,3 (-1,7%/-0,3%). Gold at 1639 after 1640 (0,0%). Copper at 372 from 374 (-0,6%). CRB closes 297,2 from 298,1 (-0,3%).
No Baltic Dry fixing, given UK May Day. Had Friday unchanged from Thursday’s new 2012 high of 1157.
All levels European COB 17:30 CET

This week:
Note that following French election son Sunday 06 May, Tuesday will be a public holiday (Victory Day) with many players off on Monday, which happens to be the UK will May Day on 07 May.
Data flow rather thin. Auctions concentrated on Tuesday. As lately, markets open to any input…

Germany: Mon Tue IP -1.2% fcst (after -1% YoY), Wed Trade Balance, Friday CPI
France: Thu IP –Mar 0.5% (after +0.3%, MoM), Fri Biz sentiment
EZ: Mon Sentix sentiment -14.5 fcst (after -14.7), EU commission growth forecast
Other EU: Spain Housing transaction Thu, CPI Friday, Italian IP on Thu
US: Inventories on Wed, Trade balance and jobless claims Thu, PPI and U Michigan Fri.
Asia: Chinese data flow mainly on Thu & Fri (Trade balance, IP, Retail Sales). Japan likewise empty until end of the week.

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

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