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 17 August 2012

17 Aug 2012 – “ Positive Vibration " (Bob Marley, 1976)

17 Aug 2012 – “ Positive Vibration " (Bob Marley, 1976)

Yesterday’s rush into the close on US figures that were obviously seen as either bad enough to warrant some more QE hopes or good enough to warrant organic growth was accelerated seemingly by Merkel comments who reiterated, of course, Germany’s support for the Draghi plans. The reminder of conditionality somehow was lost, as this remains a big unknown so far. Whatever. Markets, especially equities, are sprinting for Gold in levitation. So be it. What is clear is that despite no real nor supportive news, Periphery debt fared quite well in an empty market and has come back with a vengeance (and triggering a 7% IBEX bounce since last Friday’s close, of which 5% yesterday). Empty markets. Patchy liquidity. Sharp movements at times. 
US equities wringing out yet another winning session with the S&P pushing further away from the 1400-mark. Asia still split, like yesterday, with buoyant Japan and Australia, and the others far less convinced that whoever’s stimulus will outplay slowing growth.
European markets opening about unchanged from yesterday’s close. Had equity tentatively try a 0.5% bounce, which didn’t completely hold and then settled positively sideways. Not much in European govies, where stand-still seemed to be the best solution to start the end of the week. Flat everywhere. Curve unchanged. Spanish 10s trying to tickle whether it is possible to hold below 6.50%, for the first time since early June, and 3 bp tighter. Credit still feeling heavier than equities and a tick better to join the party. On the commodity front, Brent giving back a little and back to 114 (from yesterday’s venture past 116) and Copper catching back up.

On the data front, German PPI printing lower than expected at flat (fcst +0.3% after prior -0.4%) MoM and down to 0.9% on YoY basis.
On the titbit front, Finnish Foreign Minister’s musings about a possible EUR break-up and trust issues were confirmed as being solely personal by the his European Minister colleague. Hmmm. No real impact.
Spanish bad loan numbers rising to an unprecedented level of 9.42% in June (up from 8.95%) didn’t dent Spanish bonds with 10s at 6.45% and 2s down over 15bp to 3.72%. No real impact.
Markets taking any such news as additional must-have accelerators of a bail-out. Time being of the essence.
But what if things just drag on? MMOG of Chicken. ECB tries to stare down the Spanish trying to stare down the Germans, skipping their cousins in mind (Austrian FM in line with Finns thinking aloud about the possibility to have countries leave the EZ; Dutch Socialists, leading in polls ahead of the 12 Sep elections, thinking about a referendum), which is an error, and all trying to stare down the markets’ distrust nevertheless.

Midday levels by and large just unchanged in lowest volatility (like in it’s not even a range). Non-Bunds maybe a tick softer. Curves unchanged. 
Spain again tighter and with its 2s dragging Italian 2s along. Both curves steeper by 10bp.
Credit eventually a tick tighter. Equities a tick better, but slightly below morning slight highs. Italy and Spain indices up 1.75%. EUR sideways.
Noticeable lunchtime development with buying in Bunds (down to 3 to 1.50%), dragging Hard and Soft along, and selling in BTPs (+3) in an otherwise static market.

Michigan Confidence at 73.6 beat expectations of an unchanged 72.3, followed by Leading Indicators at +0.4% as well beating consensus of +0.2%, although prior data was revised down to -0.4% from -0.3%. Positive vibrations. Did send EUR lower to test the 23 handle. One should of course bear in mind that the better the data, the more likely QE3 won’t happen. Hence an overall muted response. Chilling out.
Overall, a quiet cosy week.

Bunds at 1.49% (-4). BKO at -0.047% (-1.1). OBLs at 0.41% (-5). EGBs eventually close the day on a tighter note, given an extra little kick once US equities fell back to unchanged.
Spain at 6.42% once more firm, but missing the 3rd 10bp decline in a row. Still, confirming below 6.50% for the week and below 500 to Bunds. Italy on the softer side in 10s, but doing fine in 2s. Both curve now at 275. Spanish 2s 3.66%.

New Issues supply from Dutch AAA Agency NWB with EUR 1.5bn 7 YRS at MS +25 and JPM entering as well the senior market with EUR 1.5bn 10 YRS printed at MS +100, with books 3 times the amount.

There won’t be any report in the coming 10 days.

Closing levels:
10 YRS Yields: Germany 1,49% (-4); Luxembourg 1,69% (-5); Finland 1,76% (-1); Netherlands 1,85% (+1); Swaps 1,85% (-5); EU 1,94% (-4), Austria 2,07% (-2); France 2,12% (-2); EIB 2,14% (-5); EFSF 2,21% (-6); Belgium 2,58% (-1); Italy 5,78% (+0); Spain 6,42% (-8).

10 YRS Spreads: Luxembourg 20bp (-1); Finland 27bp (+3); Netherlands 36bp (+5); Swaps 36bp (-1); EU 45bp (+0); Austria 58bp (+2); France 63bp (+2); EIB 65bp (-1); EFSF 72bp (-2); Belgium 109bp (+3); Italy 429bp (+4); Spain 493bp (-4).

EUR swap curve 2-5 YRS 50bp (-2,0); 5-10 YRS 80bp (unch) 10-30 YRS 46bp (unch).
2 YRS German BKOs closed -0,047% (-1,1) and 5 YRS OBLs 0,41% (-5).

Main at 145 from 146 (tighter by 0,7%); Financials at 242 after 242 (unch). SovX at 241 from 240. Cross at 583 from 585.
Stoxx Futures at 2467 / +0,5% (from 2454) with S&P minis at 1413 (+0,4% from 1408, at European close).
VIX index at 14,2 after 14,9 yesterday same time.

Oil 95,8/113,9 (WTI/Brent) from 95,0/116,1 (+0,8%/-1,9%). Gold at 1617 after 1616 (+0,0%). Copper at 342 from 336 (+1,8%). CRB at EU COB 304,0 from 302,0 (+0,7%).
Baltic Dry down a small 1% to 714 from 720. Multi-year low at 647 now 9.4% away. Next week’s business, probably.

EUR 1,231 from 1,236

ECB deposits at EUR 322bn after EUR 351bn.

Greek bonds guesstimates: still static at 2023s at 24.25% and 2042s at 20.00%

All levels COB 17:30 CET

On the week (compared to Fri 10 Aug COB):
As during most of the week, players kept chasing "Rainbows & Pots of Gold" last Friday (Bunds 1,38% -7; Spain 6,87% +5; Stoxx 2424% -0,5%; EUR 1,229), which eventually ended a split week with Germany getting back some luster, Spain drifting wider, but with equities sprinting for Gold. "Can You Feel It?" (Bunds 1,40% +2; Spain 6,81% -6; Stoxx 2414% -0,4%; EUR 1,234), we asked on Monday, as it was difficult to find a beat in a fairly listless market. Still, things started to fare better for the Periphery. Tuesday was about the markets simply "Not Fade Away" (Bunds 1,47% +7; Spain 6,71% -10; Stoxx 2431% +0,7%; EUR 1,232), but GDP readings in Germany and France, which came out just a tick better than expected, and US figures bad enough to reignite QE hope did some magic on Risk. Bad is good, these days. Wednesday closed in half of Europe. We clearly enjoyed trippy and very slow moving "Moments Of Love" yesterday (Bunds 1,53% +6; Spain 6,5% -21; Stoxx 2454% +0,9%; EUR 1,236- all compared to Tue), coming back from the Assumption holiday, which closed half of Europe (leaving the other half squeezing BONOs by 10 bp) the day before. With no real news, the day dragged along before suddenly closing up in a rush. Good news is sometimes good these days.

So this was a quiet week overall. Quiet songs. Chill outs and positive vibes. Fitting for the summer low point in activity. Political players are starting to reappear, but nothing too forcefully said, nor stated. Probably just happy of the equilibrium. Stress is easing. Germany has therefore been shoved back up to the symbolic 1.50% area. Not much further though. It take a toll on the Hard Core, with exception of the lesser liquid Luxembourg bond, victim of compression trades, be it from the far end or from the Soft Core. Belgium caught in between and soft, too. Not Hard Soft enough and probably spread against the Periphery, too. Last week had been an Italian week, this week it were Spanish 10s that were the big winner, down 45 bp to 6.42%, through the rather symbolic 6.5% barrier and especially through the 500 to Bunds (spread down over 50 bp to the 490s). Good catch-up on Italy, now only some 60 bp tighter. Sitting in the same boat. After some initial flattening, the Spanish short end caught up with the positive vibes, too, and the curve steepened back. Both Italian and Spanish 2-10s now around 275 (22 wider for Spain on the week and about unchanged for BTPs). Had closed in the 290s a fortnight ago.
Equities squeezing out a small 2% on the week (on a broad European scale, more for the Periphery), to a 5-month high, back to early March, but Credit feels less a leader than a soft follower the Main back to early May levels. Talking about rearview BONOs are back to May levels and BTPs, too, but the first still 100-150 bp above this year lows and Italy likewise above its 4.90s in 10s. German 1.50s broken to the downside for the first time mid-May, down to the 1.20s. Then hit 1.60%, as we did this week, before retesting the lows. For the moment, we remain in a range. And the all-clear has not been rung.
Commodities broadly unchanged, although we did note the spike above 116 in Brent to a new historical high paid in EUR. The latter eventually closed the week roughly unchanged.

10 YRS Yields: Germany 1,49% (+11); Luxembourg 1,69% (+4); Finland 1,76% (+14); Netherlands 1,85% (+19); Swaps 1,85% (+4); EU 1,94% (+2); Austria 2,07% (+5); France 2,12% (+5); EIB 2,14% (+3); EFSF 2,21% (+0); Belgium 2,58% (+8); Italy 5,78% (-11); Spain 6,42% (-45).

10 YRS Spreads: Luxembourg 20bp (-7); Finland 27bp (+3); Netherlands 36bp (+8); Swaps 36bp (-7); EU 45bp (-9); Austria 58bp (-6); France 63bp (-6); EIB 65bp (-8); EFSF 72bp (-11); Belgium 109bp (-3); Italy 429bp (-22); Spain 493bp (-56).

EUR swap curve 2-5 YRS 50bp (+5,0); 5-10 YRS 80bp (+2,0) 10-30 YRS 46bp (+1,0).
2 YRS German BKOs closed -0,047% (+3) and 5 YRS OBLs 0,41% (+7), on the week.
Swiss 2-years down to -0.35% from last week’s -0.38%, pretty much in line with BKOs.

Main at 145 from 149 (2,7% tighter); Financials at 242 after 246 (1,6% tighter). SovX at 241 from 248. Cross at 583 from 589.
Stoxx Futures at 2467 / +1,8% from 2424 with S&P minis at 1413 / +1,2% from 1396, at European COB last week.
VIX index at 14,2 after 15,2 last week.

Oil 95,8/113,9 (WTI/Brent) from 92,7/112,2 (+3,4%/+1,5%). Gold at 1617 after 1623 (-0,4%). Copper at 342 from 339 (+0,9%) . CRB closes 304,0 from 302,0 (+0,7%).
Baltic Dry has gone back in hiding and ended this week at 714 from 774, down by 7.8% ( after the prior week’s 9% decline)
As a reminder it fell pretty much straight down from a 2173 high in Oct to the 1800-900 area by the end of 2011, then straight down from 1930 to 647 by early Feb, recovered to 1165 early May, plunged back to 872 by early June, then rebounded to 1162 early July and has been correcting since – on a daily basis. Multi-year low at 647 just 9.4% away. Given the latest rhythm that’s next week’s business.

EUR 1,231 after 1,229 last Friday

Greek bonds guesstimates: Just didn’t move throughout the week and put with 2023s at 24.25% and 2042s at 20.00%.

All levels Friday COB 17:30 CET

Next Week:
Longest European government supply will be German 2 YRS on Wednesday. The Spanish 18m bill auction will need to be followed. Especially light week on European hard data outside PMIs on Thursday, which will be a test of whether the latest stability period has changed the outlook of things (Or whether people didn’t notice, because away…).
US data pack likewise on the lighter side.
No supply. No data. Up to drift to whatever winds might be blowing… Toss a coin?

EZ: Mon Construction output Thu Composite PMI fcst 46.4 after 46.5 Manu 44.2 after 44.0 Services 47.8 after 47.9 Consumer Confidence fcst unchanged -21.5
Germany: Thu Final GDP & breakdown Man PMI fcst 43.5 after 43.0 Serv PMI fcst 50.2 after 50.3
France: Thu MPMI fcst 44.0 after 43.4 SPMI fcst 50.2 after 50.0
Spain: Thu PPI
US: Mon Chicago Fed Tue Nothing Wed Existing Home Sales FED Minutes Thu Claims, PMI and New Home Sales, Fri Durable Goods
Asia: China Thu China PMI

There won’t be any report in the coming 10 days.

Click link on title or below for today’s musical support:
And still, Reggae tends to be boring… Fitting for ending  this week 

Thursday 16 August 2012

16 Aug 2012 – “ Moments in Love " (The Art of Noise, 1984)

16 Aug 2012 – “ Moments in Love " (The Art of Noise, 1984)

An (empty) day can make a difference… Bunds sold off rather aggressively yesterday (+10, about 100 tick in futures, alongside USTs), as equities kept hovering near their highs, while Spain gained further (-10). No European data and half of Europe on leave anyway. US figures mixed, but mixed in a sense that, uh, if there’s organic growth, there won’t be free money from the FED? That’s not good. Organic growth is slow and painful (Boo!), central bank money fast, cheap and with few strings attached (Yes!)…And anyway, QE and other supports have already been priced in… Can’t change the programme.
Early start mixed, as Asia was (partly) roaring ahead, as China’s Wen pointing to headwinds and falling inflation was interpreted differently here and there: Japan and Australia roaring ahead; SE Asia and China unchanged at best, if not negative. After a pre-open uptick, the US having furthermore closed symbolically up yet a further tick on the S&P, European Risk traded slightly lower starting into the day.

Still damaged from Wednesday’s sell-off Bunds opened around 1.56% (having failed to breach 1.60% in early morning Asian equity euphoria) and Spain bouncing off yesterday’s 6.60%. Periphery curves still flattening, albeit because of long end strength. Equities about 0.25% lower, having broadly closed unchanged yesterday. Credit 2 ticks wider. EUR being the weakest link here at 1.226.
Brent still galloping ahead on ME tensions and now past the 116-mark (and a further menace to growth at EUR 94.8 per barrel). As a reminder, peak oil in Summer 2008, had propelled Brent to $144 (then EUR 91.30) and past $ 123 in March this year (then EUR 94.20). So in EUR terms, we’re trading out new highs here. Real lofty… And a serious possible break on consumption and production. Add soft commodities surging and a EUR under pressure and shopping for essentials will trigger long faces, once people will be back from summer holiday.

No major data outside EZ CPI, as expected unchanged at 2.4%. Dutch unemployment picking up to 6.5% (from 6.3%). Not a number that would impress the South, but coming from a 5% intermediate low in Summer 2011 and the highest of the last 5 years. That is ahead of September’s elections (and despite the Netherlands Q2/GDP surprisingly turning positive).
No government supply for the rest of the week.

Midday levels show Hard Core EGBs out by 6-8 from Tuesday evening (a tick or two better than yesterday) and Bunds 1.54%, Soft Core and Agencies out 3 -5bp. Italy unchanged at 5.83%. Spain doing just great at 6.55%, down 16 from Tuesday, of which a good 10 yesterday and an additional 5 this morning. Squeezed into the void. Italian 2s a tick firmer, but Spanish 10s are trading on their own with 2s stuck above 4% at 4.10% since early this week and hence the curve flattening further.
Credit out a tick from Tuesday. Equities a tick lower. EUR stuck below 1.23. Brent over 116.

Mixed US data with slightly higher than foreseen claims at 366k and prior revision (fcst 365k after 361k revised 364k), continuous claims at 3305k (fcst 330k after 3332k revised up to 3336k), lower Housing Starts of 746k (fcst 756k after 760k revised lower to 754k), but with Building Permits at 812k (fcst 769k after 755k revised higher to 760k).
Data managed to prop up the EUR back over the 23 handle, lifting equities by a tick or 2 alongside, moving from slightly negative to ever so slightly positive. Yawn…
Had Philly Fed, reminiscent of yesterday’s Empire figures, print a lower than expected -7.1 (fcst -5 after -12.9). QE, after all? Pushed EUR further up. Organic growth??? Who needs that?

Not much outside that… 
Feels a little like the above mentioned song. Check out the video with the turtle dragging itself along… Feels like a lot of market players…Classic track, in the meantime! Soothing for FB owners... 
And the hypnotic beat equally unnerving for EUR equities and Spanish BONOs shorts (Spread to Germany down 50bp since last Friday). Like, nothing happens, and there’s a daily grind up here.
Moments of Love for Rajoy. Do nothing and be rewarded.

Bunds at 1.53% (+6 from Tuesday). BKO at -0.036% (+0.3). OBLs at 0.46% (+4).
Spain firmed up to hit round 6.500% (down 21 from Tuesday, half of this today), symbolically back through 500 to Bunds. Eventually dragging Italy tighter, down to 5.78%.
Strong afternoon catch-up in Italian and Spanish short-end bonds, erasing earlier weakness and flattening, to end steeper by 17 for Italy and 4 for Spain (2 YRS BONO 3.88% at close, from 4.10% late morning). Credit treading water and leaving equities on their own. EStoxx at the highest since early April, up 20% from early June and about 13% since end of July.

New Issues summer break seemingly starting to end with 2 senior financial deals printed for BNPP EUR 1bn 7 YRS MS +108 and Svenska Handelsbanken EUR 1bn 10 YRS at MS +80. Serious basis for BNPP. Lack of supply.

Closing levels:
10 YRS Yields: Germany 1,53% (+6); Luxembourg 1,74% (+5); Finland 1,77% (+4); Netherlands 1,84% (+7); Swaps 1,90% (+3); EU 1,98% (+3), Austria 2,09% (+4); France 2,14% (+4); EIB 2,19% (+3); EFSF 2,27% (+4); Belgium 2,59% (+2); Italy 5,78% (-5); Spain 6,50% (-21).

10 YRS Spreads: Luxembourg 21bp (-1); Finland 24bp (-2); Netherlands 31bp (+1); Swaps 37bp (-3); EU 45bp (-3); Austria 56bp (-2); France 61bp (-2); EIB 66bp (-3); EFSF 74bp (-2); Belgium 106bp (-4); Italy 425bp (-11); Spain 497bp (-27).

EUR swap curve 2-5 YRS 52bp (+4,0); 5-10 YRS 80bp (+1,0) 10-30 YRS 46bp (+0,0).
2 YRS German BKOs closed -0,036% (+0,3) and 5 YRS OBLs 0,46% (+4).

Main at 146 from 145 (0,7%); Financials at 242 after 241 (0,4%). SovX at 240 from 242. Cross at 585 from 574.
Stoxx Futures at 2454 / +0,9% (from 2431) with S&P minis at 1408 (+0,3% from 1404, at European close).
VIX index at 14,9 after 14,3 yesterday same time.

Oil 95,0/116,1 (WTI/Brent) from 93,4/113,5 (+1,8%/+2,3%). Gold at 1616 after 1601 (+0,9%). Copper at 336 from 336 (+0,0%). CRB at EU COB 302,0 from 300,0 (+0,7%).
Baltic Dry down a further 1.1% to 720, having lost nearly 3% yesterday to 728 from 750. Multi-year low at 647 (an inversion of today’s numbers) just 10.1% away. Next week’s business, probably.
The BDI does remain a very basic coalmine canary…and obviously there aren’t that many goods and ore to ship these days.

EUR 1,236 from 1,232

ECB deposits at EUR 351bn after EUR 329bn.

Greek bonds guesstimates: still static at 2023s at 24.25% and 2042s at 20.00%

All levels COB 17:30 CET

Germany: Fri PPI fcst +1.1% YoY after +1.6%
US: Michigan Conf fcst unch 72.3 & Leading Indicators fcst +0.2% after -0.3%, both late European afternoon.

Click link on title or below for today’s musical support:
Too trippy!
And video clip
Full version
And even slower version…

Tuesday 14 August 2012

14 Aug 2012 – “ Not Fade Away " (The Rolling Stones, 1964)

14 Aug 2012 – “ Not Fade Away " (The Rolling Stones, 1964)

A rather positive start of the European session on first data sets showing German and French Q2 GDP faring a tick better than expected. German GDP slowed to 0.3% (instead of the 0.2% forecast) and France slithered past negative growth and managed to maintain itself at flat (forecasts had been -0.1 to -0.2%) for a third consecutive quarter. Need to have a pinch of salt here, as the INSEE already states that there has been quite an accumulation in stocks given generally weak expectations. So frontloading Q3. 
No exactly fireworks, but anything that isn’t totally bad these days is good to have. LCH margin hike on Italian and Spanish bonds taken with a shrug.

Equities up 0.75% plus, credit 2-3 tighter. EGBs across the curve 2-4 wider. Curves unchanged. Commodities flat to better with Brent once more past the $114 mark. EUR 1.238. Asia in ok +0.5% close already integrating German and French numbers (would otherwise have been slightly negative to flat). US close flattish negative, but with the S&P managing to still cling to 1400.
Hmm… And now?
Had the German Constitutional Court deny yesterday’s delay rumour, as we had already expected yesterday. Not that the news changed much, though. Market in holiday plus wait-and-see mode.

Eventually most Core countries managed to skip recession / negative GDP (even the Netherlands at +0.2%, but Finland at -1%) , but overall EZ GDP couldn’t print beyond forecasts and came out at as expected at -0.2% QoQ (after flat). European IP a tick better at -0.6% MoM (fcst -0.7% after May was revised up to +0.9% from +0.6%).
European ZEW, too, seemed to bottom out at -21.2 (after -22.3), knowing that its German peer didn’t look too good at 18.2 (fcst 18 after 21.1) for the current sentiment, but especially bleak on economic sentiment diving to -25.5 (fcst -19.3 after -19.6).
Not much reaction to all this. Cons and Pros seem to balance out. Stand-still thereafter. Basically everything set at the opening bell.

The Greek 3m bill auction fared well with eventually slightly over EUR 4bn sold (versus targeted EUR 3.125bn) at 4.43% (after 4.28% last month). Feels like the Greek Treasury didn’t hesitate to fill overbidding, as total bids were for EUR 4.248m. Not sure, whether that was wholly intended by the bidders… But there you go. Non-competitive bids are allowed for 30% of the amount until Friday. We’ll see if they’re lifted.
Belgium closed the supply for this week with EUR 1.15bn 3m sold at -0.012% (-0.003% end of July) and EUR 1.6bn 12m sold at 0.093% (0.04% in July).
Not much else, again. Spanish banks borrowing at the ECB rising by over 10% to a new record EUR 402bn in July (compared to Italian banks at 283bn from EUR 281bn in June). Portuguese Q2 unemployment at new record 15% with Q2 GDP dipping 1.2% QoQ (fcst -0.7%).

Midday levels show Hard Core EGBs still trading  2-3 bp softer than COB, Soft Core a tick or two firmer and the Periphery 4-5 better, although only in 10s with Spanish 2s wider by 10 bp again and now back to 4.20%.
Equities back a little from their highs, as Credit, EUR or commodities ahead of the US open and US data.

Having traded roughly 5% around the ECB conference on 02 Aug, and down from a 7% high print on 25 July, Spanish 2s traded down into 2 steps first to 4% on Friday after the ECB and then down another 60 bp to about 3.40% on Monday thereafter. 2-10s flattened from low 200s early July down to a 75 bp low, before shooting to 330, so we are now pretty steadily flattening back to Square 1 (Average since 2010 is roughly 200 anyway…Former low in the 60s was in November 2011. YTD average 230). To keep it short: Draghi’s effect is fading away…
In the meantime, Rajoy repeated that he wouldn’t ask for support before ECB buying details are fleshed out. Knowing that details can in reality only be fleshed out once someone, namely Spain, asks for help, as most solutions will need to be bespoke, we’re not exactly advancing. It’s not like the ECB was working on a new type of liquidity line, open to all, that could be drawn at will like an ATM. I had the impression there was some urgency.
And it’s not like the ECB reeeeaaaally craves to buy these bonds. Surprising complacency.

US Small Biz optimism under forecast at 91.2 (fcst 91.6 after 91.4), a 9m low.
 PPI 0.5% YoY (fcst +0.5% after +0.7%), profiting from then lower energy prices. Ex-food / energy sticky at +2.5% after 2.6%. Retail Sales higher at 0.8% (fcst +0.3% after -0.5%, revised lower to -0.7%). Revision even stronger on less Autos basis (+0.8% versus fcst +0.4% after -0.4% revised -0.8%).  Finally, US Biz inventories rose only 0.1% (fcst unch +0.3%).
Good news, but then not so good news?! So, no QE, after all? But good for an initial quick jolt in Risk and sending Bunds crashing down, as well as the EUR lower.
EGBs now twisting around stable Austria and France with the Hard Core sold off up to 6 and the Periphery down 6 for Italy to low 5.80s and over 10 for Spain to 6.70%, regardless of Rajoy’s non-comments. Spain-Bunds spread nearly tightening 20bp on a no news day. Beats me.
Might be (yet another) Handelsblatt article doing rounds about the possible snap elections, in case Merkel doesn’t gets her way with regards to German EUR / EZ support.

Had Germany’s EcoMin Roesler on the tapes late afternoon, opposing debt union out of Helsinki (Knights Who Say Ni).

Bunds at 1.47% (+7). BKO at -0.038% (+1.4). OBLs at 0.42% (+5).
Spain firmed up in the lows 6.70s (6.71%, 10 tighter), but the curve again flatter.

New Issues summer break interrupted by Unicredit launching an OBG (Italian covered bond) with EUR 750m long 5 YRS issued at MS +290, that is about 100 bp through Italy. The first public issue of such OBG since the same issuer brought a 10 YRS OBG in Aug last year at MS +215. Rating A2/AA+/A (versus Baa2/BBB+/A- for Italy). French BFCM even lining up a 10 YRS senior benchmark deal at MS +150 area.

Will skip tomorrow’s report, as most of Europe will be shut.

Closing levels:
10 YRS Yields: Germany 1,47% (+7); Luxembourg 1,69% (+4); Finland 1,73% (+8); Netherlands 1,77% (+7); Swaps 1,87% (+6); EU 1,95% (+5), Austria 2,05% (unch); France 2,10% (+1); EIB 2,16% (+5); EFSF 2,23% (+5); Belgium 2,57% (+1); Italy 5,83% (-5); Spain 6,71% (-10).

10 YRS Spreads: Luxembourg 22bp (-3); Finland 26bp (+1); Netherlands 30bp (unch); Swaps 40bp (-1); EU 48bp (-2); Austria 58bp (-7); France 63bp (-6); EIB 69bp (-2); EFSF 76bp (-2); Belgium 110bp (-6); Italy 436bp (-12); Spain 524bp (-17).

EUR swap curve 2-5 YRS 48bp (+4,0); 5-10 YRS 79bp (+1,0) 10-30 YRS 46bp (unch).
2 YRS German BKOs closed -0,038% (+1,4) and 5 YRS OBLs 0,42% (+5).

Main at 145 from 149 (2,7% tighter); Financials at 241 after 247 (2,4% tighter). SovX at 242 from 248. Cross at 574 from 591.
Stoxx Futures at 2431 / +0,7% (from 2414) with S&P minis at 1404 (+0,6% from 1395, at European close).
VIX index at 14,3 after 14,4 yesterday same time. Sad Old VIX…Approaching its Mar 2012 5-year lows…

Oil 93,4/113,5 (WTI/Brent) from 92,2/113,3 (+1,3%/+0,2%). Gold at 1601 after 1617 (-1,0%). Copper at 336 from 334 (+0,6%). CRB at EU COB 300,0 from 299,0 (+0,3%).
Baltic Dry down a further 1.8% to 750 from 764. Multi-year low at 647 (an inversion of today’s numbers) just 13.7 away%. Next week’s business, probably. The BDI does remain a very basic coalmine canary…and obviously there aren’t that many goods and ore to ship these days.

EUR 1,232 from 1,234

ECB deposits at EUR 326bn after EUR 311bn.

Greek bonds guesstimates: totally static at 2023s at 24.25% and 2042s at 20.00%

All levels COB 17:30 CET

Rest of Week:
Assumption Day tomorrow will shut most of Europe (Austria, Belgium, France, Italy, Lux, Portugal, Spain) leaving mostly Germany and Italy to play ball.
Market movements subject to US numbers and European rumours.

Germany: Fri PPI fcst +1.1% YoY after +1.6%
France: done for the week
EZ: Thu CPI fcst 1.9% after 1.6%
Periphery: done for the week
US: Wed CPI YoY fcst +0.2% after flat; Empire Manu, IP fcst +0.5% after +0.4%, Capacity fcst 79.2% after 78.9%; Thu Claims fcst 365k after 361k, Housing Starts fcst 757k after 760k & Building permits 768k after revised 760k, Philly Fed fcst -5 after -12.9; Fri Michigan Conf fcst 72.3 after 72.3 & Leading Indicators fcst +0.2% after -0.3%.

Click link on title or below for today’s musical support:
They will never fade away!

Before long years of tribulations…
And after…
Impressive that Mick Jagger still has the same hair style…

Monday 13 August 2012

13 Aug 2012 – “ Can You Feel it? " (Mr. Fingers / Ch. Prommers, 1986)

13 Aug 2012 – “ Can You Feel it? " (Mr. Fingers / Ch. Prommers, 1986)

Was this another flip-flop we heard gently falling? Japanese GDP grew solely 0.3% QoQ (fcst 0.6% after prior revised a ticker higher to 1.3%), or 1.4% annualized. Yep, makes the JPY level even more irking for the government. No Chinese data, knowing that RRR cuts seem off the table for now. The US enjoyed a better close on Friday, wringing out a 0.25% gains, helping Asia to mainly only reduced losses, although China is down a hefty 2%.

Muted European open, quite sanguine actually given weekend bits and pieces (Germany suddenly seeming less alone in opposing Periphery bond buying, supported, unsurprisingly, by the Finnish government, as well as by Belgium’s Coene – in actually rather strong worded statements). And the Troika’s frustration with Greek developments is creeping back.
EGBs about unchanged across the board, including the Periphery (for a choice a tick stronger). Curves unchanged. Credit unchanged. Equities at COB levels, maybe a shade weaker. Difficult to feel a pulse here... Only outlier would be Brent, up 1.5% to just shy of $114 (EUR 92.7).

Outside that not much. Data will be sparse this week. No long end auctions. Assumption Day in most of Europe on Wednesday should further diminish activity. Need to drift and flight by sight. 

Auctions in bills out of Italy, Germany and France, to be followed tomorrow by Greece and Belgium. Italy had slated a rather chunky EUR 8bn of 1-year paper (2 year average size was rather EUR 7bn), which was issued at 2.767% (July levels were 2.697%, after 3.972% in June). Stable bid-to-cover. Deal done.
Germany unsurprisingly raised EUR 4bn 6m bills at record low -0.0499% (from -0.034% in July and 0.007% in June) with only EUR 230m retained for market intervention. France followed with a total of nearly EUR 7.2bn, split in EUR 4bn 3m at -0.016% (after -0.01% 2 weeks ago), EUR 1.7bn 6m at -0.01% (after -0.01%) and EUR 1.5bn 12m at 0% (after -0.006% ).

Had a little ROn playing out by late morning with the Italian auction over at a manageable price. Periphery tightening with Spain down to low 6.80s. Short Periphery on stand-still, though, and curve flattening in mechanical manner. Equities flat after the slightest drop at the start. Credit unchanged. EUR “spiking” over 23-mark. Hard Core softer by 5 bp, as the Italian auction results sent Bund futures tanking. Had Greece’s Q2 GDP contract by “only” 6.2% (fcst -7% after 6.5%), as cited for positivism.

Same pattern over midday and into the US open with some more softness in the Hard Core and Spain adding a little in performance. Periphery curves flattening further with the short end still soft, for choice. Equities up a little into positive territory, jolting credit a couple of ticks tighter from a sluggish morning session.
Brent still on the rise on Middle-East tensions.

Levitation exercise coming to an end with the US open and then drifting back to yesterday’s levels. Had news doing rounds that the German High Court would have to delay its ESM ruling because plaintiffs were arguing that a similar case is now treated at the European Court in Lux, but that doesn’t seem to be the best of reasons, knowing that German constitutionality confirmation is requested at this stage. Still, brought back the discussion. ROff.

Not much life. Nor conviction.
Barely a pulse.
Can you feel it?

Bunds at 1.40% (+2). BKO at -0.052% (+2.5). OBLs at 0.37% (+3).
Italy about unchanged. Spain firmed up in the lows 6.80s (6.81%, 7 tighter), but both curves flatter by about 10bp.

European GDP data and ZEW tomorrow..
Wednesday closed in 2/3 of Europe. Hitting summer low point. Beware of patchy liquidity.

New Issues summer lull…

Closing levels:
10 YRS Yields: Germany 1,40% (+2); Finland 1,65% (+3); Luxembourg 1,65% (unch); Netherlands 1,70% (+4); Swaps 1,81% (unch); EU 1,90% (-2), Austria 2,05% (+3); France 2,09% (+2); EIB 2,11% (unch); EFSF 2,18% (-3); Belgium 2,56% (+6); Italy 5,88% (-1); Spain 6,81% (-6).

10 YRS Spreads: Finland 25bp (+1); Luxembourg 25bp (-2); Netherlands 30bp (+2); Swaps 41bp (-2); EU 50bp (-4); Austria 65bp (+1); France 69bp (+0); EIB 71bp (-2); EFSF 78bp (-5); Belgium 116bp (+4); Italy 448bp (-3); Spain 541bp (-8).

EUR swap curve 2-5 YRS 44bp (-1,0); 5-10 YRS 78bp (+0,0) 10-30 YRS 46bp (+1,0).
2 YRS German BKOs closed -0,052% (+2,5) and 5 YRS OBLs 0,37% (+3).

Main at 149 from 149 (unch); Financials at 247 after 246 (0,4% wider). SovX at 248 from 248. Cross at 591 from 589.
Stoxx Futures at 2414 / -0,4% (from 2424) with S&P minis at 1395 (-0,1% from 1396, at European close).
VIX index at 14,4 after 15,2 yesterday same time.

Oil 92,2/113,3 (WTI/Brent) from 92,7/112,2 (-0,5%/+1,0%). Gold at 1617 after 1623 (-0,4%). Copper at 334 from 339 (-1,5%). CRB at EU COB 299,0 from 302,0 (-1,0%).
Baltic Dry on its late daily deep dive, down 1.3% to 764 from 774. Multi-year low at 647 (an inversion of today’s numbers) just 15.3 away%. Next week’s business?

EUR 1,234 from 1,229

ECB deposits at EUR 311bn after EUR 289bn.
SMP buying last week (unsurprisingly) at zero.

Greek bonds guesstimates: static at 2023s at 24.25% and 2042s at 20.00%

All levels COB 17:30 CET

This Week:
No European long end auctions. Further bills tomorrow in Belgium and Greece (for a chunky EUR 3.125bn this time).
Will need to check out the GDP numbers and ZEW in Europe.
Assumption Day on Wed will shot most of Europe (Austria, Belgium, France, Italy, Lux, Portugal, Spain) leaving mostly Germany and Italy to play ball.
Market movements subject to US numbers and European rumours.

Germany: Tue prel. Q2 GDP fcst +0.2% after +0.5%, ZEW Current fcst 18 after 21.1 Sentiment -18.5 after -19.6; Fri PPI fcst +1.1% YoY after +1.6%
France: Tue CPI fcst unch +2.3% YoY, prel. Q2 GDP fcst -0.2% after flat
EZ: Tue Q2 GDP fcst -0.2% after flat, ZEW Thu CPI fcst 1.9% after 1.6%
Periphery: SP Tue CPI
US: Tue Small Biz optimism, PPI YoY fcst +0.5% after +0.7%, Retail Sales fcst +0.3% after -0.5%, Biz inventories fcst unch +0.3%; Wed CPI YoY fcst +0.2% after flat; Empire Manu, IP fcst +0.5% after +0.4%, Capacity fcst 79.2% after 78.9%; Thu Claims, Housing Starts & Building permits, Philly Fed; Fri Michigan Conf & Leading Indicators

Click link on title or below for today’s musical support:
Beat… Beat… Beat.. No beat. Lifeless.

Jump to the real deal!

And of course…