Shuffle Rewind 12-16 Nov
" No Direction " (Simply Red, 1985)
This week in review (compared to Fri 09
Nov COB):
Click
on day for related post, on title for song.
The
week ending 09 Nov
saw elections clearing the way for a second Obama mandate and brought the Fiscal
Cliff question back into the light. While fundamental negative economic figures
were mostly ignored at the beginning on the week, once Wednesday showed final
results, markets started sinking. An awakening.
"Wake Up" (Bunds 1,34% -11; Spain 5,81% +17; Stoxx 2481 -2,4%;
EUR 1,271 -130)
This Monday
opened softer, as Europe, having sold off Friday morning was squeezed into the
weekend close, before US
stocks slumped back at their own close. Then again, once done, markets went
rather quiet. The Periphery, while still on the soft side, mainly trailed a
generally softer Risk sentiment, somehow waiting for the US to “Show Me The Way" (Bunds
1,34% unch; Spain 5,88% +7; Stoxx 2473 -0,3%; EUR 1,271 unch), despite
looming European problems (mainly Greece). As Greek discussions overnight
revealed a spat between Europe and the IMF, and given yet another closing slump
in the US, Tuesday
started on a weak footing with Risk nearing Friday lows, before being ramped up
by rumours, showered again and finally supported by the US opening in negative,
albeit tame manner, before moving into positive territory and taking everything
along. Given the noon despair, the afternoon relief seemed…exuberant. Especially
as the US still led the
way, "That's The Way" (Bunds
1,34% unch; Spain 5,83% -5; Stoxx 2494 +0,8%; EUR 1,272 +10). Wednesday
was another case of Lather. Rinse. Repeat. See-sawing – and looking for direction. Weaker open, in
line with the US close. Some exuberance ahead of the Italian auction, despite
negative figures. Awakening that nothing was justifying this. Re-correction.
Some more European gloomy news to end the day. Mostly an equity move,
although Spain
got slammed. "Way Down"
(Bunds 1,34% unch; Spain 5,92% +9; Stoxx
2475 -0,8%; EUR 1,274 +20). Trashy US close on Wednesday evening, resilient
Thursday
open in Europe. Saved by the gong – and
slightly better than expected GDP figures in France,
Germany and Italy. Still,
once that said and despite this resilience, Europe kept looking for a lead, but
no one really knows who’s leading whom these days: "Are You Gonna Go My Way?" (Bunds 1,34% unch; Spain 5,89% -3; Stoxx 2459 -0,6%; EUR 1,279 +50).
Friday
was eventually mostly boring: Several inconclusive downside tests in European
equities, with static bonds, unwilling to tighten further. More US equity
weakness, more downside. Afternoon US equity dump. Again with Credit, EGBs,
most commodities just watching. Dismal European close. "That's the Way (I Like It)" (Bunds
1,32% -2; Spain 5,86% -3; Stoxx 2429 -1,2%; EUR 1,270 -90). 5 minutes after
EU close, the US market was spun around by initial Boehner comments,
interpreted as ways could be found on the Fiscal Cliff issue. To be followed.
While the prior week was marked by some kind
of awakening, this week was more about finding a direction. Eventually mostly
downwards, but always in jumps, marked by tentative rebounds. Europe mostly
lost, so unused not to be the focal point anymore, waiting for US input. If it wasn’t
for the Fiscal Cliff, and in absence of further news out of the Periphery, we
seem to have
"No Direction" (Bunds 1,32% -2;
Spain 5,86% +5; Stoxx 2429% -2,1%; EUR 1,270 -10)
After several very strong weeks for bonds,
it seemed quite difficult to keep that drive, at least for the Hard Core, which
by and large refused to react to equity weakness. With remarkable and rare
consistency, Bunds closed at 1.34% (last Friday’s closing level), every single
day this week with rare “spikes” to 1.32% lows and sometimes even 1.365% highs,
for a change. Eventually closed at 1.32%, but only because the US fell out of
bed.
German
Schätze stayed in negative territory, as well in restricted volatility.
In
the meantime, swaps and Soft Core (Austria
& Belgium) traded new
historic lows this week with France
nearing, too, its August lows of 2.055%. French 2 and 5 YRS were auctioned at
historic lows this week, as were Dutch 10 YRS. Belgium still doing great at 17
over France (unchanged) and down to B+93 (from 96 last week).
Periphery
still bobbling up and down, but with not much of an own dynamic these days.
It’s more a case of going with the general Risk assessment. Breaching
symbolic levels for a while (5% for Italy,
B+450 for Spain
with 10s just under 6%) didn’t trigger much of a panic. Wednesday 12m bills
auction went well in Italy, while Wednesday’s test to renter the very long end was
just so so. Auction results were very good price-wise, rather doubtful
demand-wise. Looked like being sponsored and put off the market for a while. Eventually
digested and with Italy
showing better than expected GDP numbers (or rather less bad), demand for BTPs
seemed to pick up again. Spain drifting on its own and performing so so on the
week (+7, -5, +9,-3,-3. Overall +5 at 5.86%, B+454). Italy (+ 7 to past 5%,
-6,-unch Wed,- 7, -2. Overall -10 to 4.87% or B+355). For both, symbolic pain
levels at 5 and 6% have been avoided to end the week.
Short
end mostly uninspired, too, closing at 2.06% and 3.22%. Italian 2-10s at 281bp
(-5) and Spanish equivalent at 264 (-8) with the flattening coming from the
overall 10 YRS strength.
EUR
swap curve out to 10 YRS at historic lows, again.
2-10s
at 127 after 128, but just in the last hours of the week. Some ROff with 10-30s at 61 from 58.
Credit
once more overdoing Risk swings and still decompressing for overly tight lows a
couple of weeks ago. Out by some 5% versus equities down slightly over 2%. As
for the Periphery, mostly static with some re-adjustments in jumps. Lacks own
dynamic.
Having
closed the prior week down 2.4%, European equities remained mostly rangy,
around / slightly below the 50d average and trailing the US (+0.3%, +0.8%,
-0.8%, then a heavier -1.2% and a dismal -2.1% on Friday ). Might see a
positive gap on Monday, depending on weekend news as the Europe closed LOD/LOW –
just some 5 minutes before US equities were turned around, closing some 1%
higher than at 17:30 CET.
VIX
now confirmed over the 18-mark for a while - yet still far from panic levels.
European 50d & 100d: EStoxx 2514/2435 (50d/100d), DAX
7285/7035, CAC 3453/3392, MIB 15683/14991, IBEX 7857/7423.
US
100d& 200d for INDU 13123/12992, SPX 1405/1382 and NASDAQ 3015/2985, as totally
Apple-challenged (200d 595).
50% INDU retracement of the Oct 2011 – Oct
2012 at 12.447. S&P at 1317. NASDAQ 2819 (broken 17:25 on Friday, 10
minutes before being sharply spun around).
Very stable EUR, which has obviously
lost its Risk Off indicator function, at least for now. Has actually been
profiting from US ROff – until a sharper Friday correction. Stuck in charts.
EUR:
100d 1.265 & 200d 1.281. Fibo retracement (of May 2011 1.494 & Jul 2012
1.204 down-leg) at 1.273& 1.315.
Jul 2012 to Sep rebound levels: 1.231 – 1.247 – 1.261 – 1.274 – 1.291.
Commodities
absolutely uninspiring on the week. Oil reacted duly to Middle-East tensions… up
$ 2-3…for a day… then back. Gold managing to hold above the 1700-mark, but
heavy.
New
Issues rather uninspiring with EUR 12.5bn printed in 17 benchmarks (down from
EUR 14.7bn last week). Highlight was Xstrata’s 2-trancher for EUR 1.25bn May 2016
at MS +100 and EUR 1bn 6 YRS at MS +140. Note as well IBM with EUR 1bn 7 YRS at
MS +20, as well as the return of an Irish Bank in covered bond format after 3
YRS with BOI going for EUR 1bn 3 YRS at MS +270. Irish utility ESB was in the
markets, too, with EUR 500m 7 YRS at MS +320.
Outlook: More of the same? Certainly. There
isn’t much in terms of European data until next week’s Thursday, which will be
PMI day. Wednesday crowded US data dump ahead of Thu 22 Thanksgiving holiday.
Black Friday.
EU FM meeting on Monday evening and
Eurogroup on Tuesday to settle Greece… or probably not. Spailout & Grexit…
Fiscal Cliff always good for a market move
in the coming weeks. US (and EU) Fri equity close up for interpretation chart-wise. Avoided real 50%
retracement breach on the NASDAQ, but just so. Despite this rebound, the US was
markedly down.
Light week auction week: Tue 12 & 18m
Spanish bills; Wed 10 YRS Bund increase and Portuguese bills; Thu 2015 2017
& 2021 BONOs. Thus, all eyes on Spain.
On the week (compared to Fri 09 Nov
COB):
10
YRS Yields: Germany 1,32% (-2); Luxembourg 1,47% (-2); Netherlands 1,58% (-3);
Finland 1,60% (-3); Swaps 1,66% (-2); EU 1,70% (-3); Austria 1,77% (-3); EIB
1,86% (-3); EFSF 1,98% (-2); France 2,07% (-5); Belgium 2,25% (-5); Italy 4,87%
(-10); Spain 5,86% (+5).
10
YRS Spreads: Luxembourg 15bp (unch); Netherlands 26bp (-1); Finland 28bp (-1);
Swaps 34bp (unch); EU 38bp (-1); Austria 45bp (-1); EIB 54bp (-11); EFSF 66bp
(unch); France 75bp (-3); Belgium 93bp (-3); Italy 355bp (-8); Spain 454bp
(+7).
EUR
swap curve 2-5 YRS 46bp (unch); 5-10 YRS 81bp (-1,0) 10-30 YRS 61bp (+3,0).
2
YRS German BKOs closed -0,052% (-2) and 5 YRS OBLs 0,34% (-2), on the week, with
UST closing at 1,56% (-6).
Swiss
2-YRS were as uneventful as Schätze and closed at -0.25% from -0.257%.
Main
at 139 from 132 (5,3% wider); Financials at 188 after 180 (4,4% wider); Cross
at 572 from 534 (7,1% wider).
Stoxx
Futures at 2429 / -2,1% from 2481 with S&P minis at 1344 / -2,7% from 1382,
at European COB last week.
VIX
index at 18,3 after 18,0 last week.
Oil
86,9/108,2 (WTI/Brent) from 85,7/108,0 (+1,4%/+0,2%). Gold at 1711 after 1734
(-1,3%). Copper at 343 from 343 (+0,0%) . CRB closes 293,0 from 292,0 (+0,3%).
BDIY finally ended its 2-week slide from the
latest 1048-high with a healthy 10.2% rebound to 1036 from last Friday’s 940.
Intermediate 2012 high (post-Chinese New
Year) was at 1165 early May after a 10-year low at 647 early Feb, before
dipping to 872 in June, rising back to 1162, retesting lows at 661 mid-Sep,
re-testing highs at 1109 before sliding back to 916 in the last down-leg. Seems
to point to around 1000 as balanced level, from a seagull view.
EUR
1,270 after 1,271 last Friday
Greek guesstimate:
Greek bonds back to 17.25% for 2023s and 14.50% for 2042s, 75bp tighter from
last week’s closing at 18% and 15.5%, as haggling remains on-going and can
kicking alive.
All levels Friday COB 17:30 CET
Fast-forward
Macro and Events:
PMI week. There really isn’t much in terms
of European data until next week’s Thursday, which will be PMI day.
Wednesday crowded US data dump ahead of Thu
22 Thanksgiving holiday.
Light week auction week: Tue 12 & 18m
Spanish bills; Wed 10 YRS Bund increase and Portuguese bills; Thu BONOs. All
eyes on Spain, thus.
EZ: Mon 19 Construction; Thu 22 Comp / Manu
/ Services PMI last 45.7, fcst 45.5 after 45.4 and 46 unch, EZ Consumer Conf
fcst -25.5 after -25.7
GE: Tue PPI; Thu 22 PMI Manu last 46
Services 48.4; Fri 23 Final GDP, IFO Nov Biz Climate last 100, Current last
107.3, Expectations last 93.2
FR: Thu 22 PMI Manu last 43.7, Services
last 44.6; Fri 23 Biz Conf last 85
Italy: Mon 19 Sep Indu Orders last +0.7%
MoM & Sales last +2.9% MoM; Fri 23 Retail Sales last +0.% MoM
Spain: Wed 21 Trade; Fri 23 PPI
US: Mon 19 Home Sales; Tue 20
Housing Starts and Permits; Wed 21 PMI, Claims, U Michigan, Leading Indicators.
Wed 22 Thanksgiving
CH: Thu HSBC PMI
Click link under title or below for
today’s musical support:
Quite proud of my “Royal Flush” with
songs containing “Way” in the title last week. All these different ways, but No
Direction…
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