20 April 2012 – "Walk on Hot Coals" (Rory Gallagher, 1973)

20 April 2012 – "Walk on Hot Coals" (Rory Gallagher, 1973)

http://youtu.be/c5Hsu-A-WYM

Jittery start into the day, ahead of the weekend. US closing down 0.5% and 0.5% from European closing levels. Asia mostly slightly in the red with solely China closing slightly up (but taking into account positive pre-opening future levels in Europe). Had a short term boost in risk assessment as the German IFO printed higher than anticipated and than prior (109.9 after 109.8), although a little pause had been expected. Harking back to pre-summer 2011 levels. Same for producer prices. Germany, an economy de-correlated from everyone else? Odd.

Anyhow. Some wobbles in bonds, with Spain tickling again the 6% mark before thinking better, Italyweakish, France up and down, EFSF correcting towards French levels. Likewise in equities crossing yesterday’s closing levels half a dozen times before settling a bit higher into the lunch break in order to wait for some US impulse (without figures). Commodities flattish. Credit, too, a tick weaker for choice.

New Issues restricted to G4S issuing EUR 600m 5 YRS at MS +150.

In absence of further panic or news, risk assets are drifting a bit higher and the sovereigns, as a whole, suffered a bit of set-back.

Would be surprising to have anything new, concrete or exciting coming out of the G20 spring meeting. These fire wall expansion talks all being in so far dangerous, as, as soon as the new bazooka is in one’s hands, it’s bound to be subject to demands to be tested. Still, some more commitment would be good.

Need to see what comes out of the first round of French elections this weekend. In any case, expect pressure on France to continue. At some time, it will ricochet (further) on Austria, Holland and the EFSF and certainly on Belgium. If markets tense, of course, the periphery will as well overshoot. Having as well Greek elections in 2 weeks and haven’t heard much for the moment... Next two weeks might become rock’n roll.

10 YRS Yields: Germany 1,71% (+1); Luxembourg 2,21% (+4); Swaps 2,24% (+2); Finland 2,25% (+2); Netherlands 2,31% (+4); Austria 2,93% (0); EFSF 3,00% (+6); France 3,08% (-1); Belgium 3,45% (+2); Italy 5,66% (+7); Spain 5,94% (+5).

10 YRS Spreads: Luxembourg 50bp (+2); Swaps 54bp (+2); Finland 54bp (+1); Netherlands 61bp (+2); Austria 122bp (-2); EFSF 130bp (+5); France 137bp (-2); Belgium 174bp (+1); Italy 395bp (+5); Spain 423bp (+3).

EUR swap curve 2-5 YRS 47bp (+0,4); 5-10 YRS 70,7bp (-0,6) 10-30 YRS 26,8bp (+0,0).

2 YRS German BKOs closed 0,14% (+1) and 5 YRS OBLs 0,67% (+2).

Main at 144 from 145 (-0,8%); Financials at 255 after 255 (0,2%). SovX at 283 from 282. Cross at 675 from 684.

Stoxx Futures at 2253 / +1,3% (from 2223) with the S&P at 1385 (+0,1% from 1384, at European close).

VIX index at 17,6 after 18,7 yesterday same time.

EUR 1,321 after 1,313                                                                                                                          

ECB deposits down EUR 11bn to EUR 746bn

Oil 104,6/119,5 (WTI/Brent) from 102,4/118,7 (+2,1%/+0,6%). Gold at 1645 after 1649 (-0,2%). Copper at 369 from 362 (+1,9%). CRB closes 301,4 from 300,0 (+0,5%).

Baltic Dry finally 1067 from 1027 (+3.8%), the highest rise so far this year.

All levels European COB 17:30 CET

On the week (compared to Fri 13 Apr close):

10 YRS Yields: Germany 1,71% (-2); Luxembourg 2,21% (+2); Swaps 2,24% (+3); Finland 2,25% (+4); Netherlands 2,31% (+9); Austria 2,93% (+2); EFSF 3,00% (+14); France 3,08% (+13); Belgium 3,45% (+7); Italy 5,66% (+15); Spain 5,94% (-2).

10 YRS Spreads: Luxembourg 50bp (+4); Swaps 54bp (+5); Finland 54bp (+6); Netherlands 61bp (+11); Austria 122bp (+4); EFSF 130bp (+16); France 137bp (+15); Belgium 174bp (+9); Italy 395bp (+17); Spain 423bp (0)

France certainly this week’s looser (alongside Italy, but the latter IS periphery).

Old DBR reference Jan 2022 at 1.63% (-1), closing again near all-time lows. Another excellent week for the German debt, having as well raised 2 YRS at an all-time low. 2 YRS German BKOs closed 0,14% (+0) and 5 YRS OBLs 0,67% (+0), on the week.). Historic.

EUR swap curve 2-5 YRS 47,3bp (+0,4); 5-10 YRS 70,5bp (-2,0) 10-30 YRS 26,8bp (-1,9). Flight into 5s ongoing.

Portugal faring very good out of the limelight with 2YRS 13.25% 5 YRS 12.75% 10 YRS 11.5% (from 14.25% 14.25% 12.25%)

Greece a bit softer with 2023 yielding 21% from 20.75%  & 2042 17.25% from 16.75%

The ECB confirmed that it didn’t buy any EU sovereign bonds this week, either. So much for the hope…

Main at 144 from 143 (-1,2%); Financials at 255 after 247 (0,4%). SovX at 283 from 279. Cross at 675 from 676.

Credit eventually in line with risk assets in general on a weekly close. What seemed certain is that any surge in sentiment had credit reacting slower and later, so underlying heaviness.

Stoxx Futures at 2253 / +1,1% from 2227 with the S&P at 1385 / +0,8% from 1375, at European COB last week.

VIX index at 17,6 after 18,9 last week.

Eventually stable. YTD performance about zero, compared to S&P at +10%

VIX index at 17,6 after 18,9 last week.

EUR 1,321 after 1,308 last Friday. Seems slightly overdone, hinges on German numbers.

Oil 104,6/119,5 (WTI/Brent) from 103,2/121,4 (+1,4%/-1,6%) . Gold at 1645 after 1665 (-1,2%). Copper at 369 from 361 (+2,1%) . CRB closes 301,4 from 304,2 (-0,9%).Commodities uneven. Brent / WTI decompression continues (3% this week). Gold softer on USD. Copper better on China. Overall slightly lower with the rest of risk assets.

Baltic Dry remains in strong rebound mood, hurdling the 1000-mark and closing at 1067 from 972 (+9.8%) , the most sportive week so far this year.

Next week:

Once more, heading into month end, a thin week for hard data, leaving markets probably trading more on sentiment and technicals. Will need to follow closely post first election round price dynamic on the French debt, as well as Italy and Spain.

French bill auction on Mon shouldn’t yield any surprise. Have Italian test with bills (Tue) and bonds (Fri). Spanish bills on Tue. Some Dutch 2 YRS and German 30 YRS to enhance maturity and credit mix.

Germany: PMI on Mon (Manu fcst 48.9 after 48.4), CPI on Thu (fcst 2.2% after 2.3% YoY), Consumer confidence on Fri

France: Biz confidence (fcst unchanged 96 after 96) & PMI (Manu fcst 47.2 after 46.7), Consumer conf on Tue, Employment on Thu, PPI and Cons Spend on Fri

Other EU: EU PMI on Mon (49.3 fcst after 49.1) & Final 2011 Eurostat figures on EU sovereign debt. EZ confidence figures on Thu.

SP Mortgages on Tue & Budget balance, Retails sales and Unemployment on Fri. IT Cons conf on Mon (fcst 96.5 after 96.8). IT Biz conf Thu and retail sales Fri.

US: Nothing on Mon. Housing & Consumer Conf Tue. Durable goods and FOMC on Wed. Jobs and home sales on Thu. GDP and Mich conf on Fri.

Asia: Japan Small Biz conf Tue. Machinery orders Wed. Industry activity Thu. Busy Fri with Indu Prod, Retail and Construction. China HSBC PMI on Mon. Leading indicator on Tue.

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

http://youtu.be/c5Hsu-A-WYM

19 April 2012 – "Mmm Mmm Mmm Mmm" (Crash Test Dummies, 1993)

http://youtu.be/vIbcqgXh5-4

Puzzled we were, puzzled we remain. Upbeat European open, notwithstanding a US close on European closing levels and an overtly slightly negative to flat at best Asian close. Maybe it was the sun shinning (at least in Paris) in the morning that propelled equities up to 1% higher by mid-morning…

No major eco data to lean on. POBC is hinting that it might work on RRR at some time, but definitively in targeted manner. Obviously, should there be a need for some measures to prop up the economy; it won’t be a liquidity deluge. No free for all, and a tight fist on housing.

French and Spanish auctions out of the way. France uneventful with next to EUR 8bn raised in 2, 3 and 5s in strong bid to covers (2.3 to 3), albeit at wider levels than last month (1.06% after 0.89% and 1.83% after 1.78%, for 2s and 5s), showing the grind on the French debt over the last weeks and ahead of the presidential elections. Compare this with yesterday’s 2 YRS sold at 0.14% in Germany. Spain duly reached the targeted EUR 2.5bn with EUR 1.1bn 2s at 3.46% and EUR 1.4bn 10s at 5.74%. Last 10 YRS auction was in Jan at 5.40%. 3 YRS (as comparison) were sold 2.89% 2 weeks ago. Why the 10 YRS were paid that price, although quoted at 5.79% just before, and yesterday’s close, and 5.82% after the auction is a bit of a mystery... Some generous donors?

Anyhow, the European “test” of auctions thus passed, markets went off the euphoria and hovered just above yesterday’s closing levels throughout ALL asset classes for a while, for once an easy read, before reconsidering things and testing the upside again heading into the lunch.

Very disciplined markets – for a while. Maybe Italy was a bit on the weak side (+5 by late morning), then correcting back. In a nutshell, by noon, things were just fine, thank you.

However nervousness is out there and unwarranted downgrade rumours of France put markets in risk off mode. Negative sentiment took finally over as US figures all came out lower then expected (jobless 386k versus 370 fcst; Philly Fed and homesales, too). Enough to tip everything in the worst of mood...

New issue activity was on the quieter side, despite a better start into the day. French UNEDIC managed to print EUR 1bn 5 YRS at MS +76, before things turned too bleak.

Aïe! France starts to trade in line with Italy and Spain... Won’t get any better in the coming days. Spread to Germany already out by 17 bp since last Friday.

Really bad close.

10 YRS Yields: Germany 1,69% (-2); Luxembourg 2,17% (-1); Swaps 2,21% (+2); Finland 2,22% (+1); Netherlands 2,28% (+4); Austria 2,93% (+4); EFSF 2,94% (+2); France 3,09% (+9); Belgium 3,43% (+5); Italy 5,59% (+12); Spain 5,89% (+10).

10 YRS Spreads: Luxembourg 48bp (+1); Swaps 52bp (+3); Finland 53bp (+3); Netherlands 59bp (+6); Austria 124bp (+6); EFSF 125bp (+4); France 139bp (+11); Belgium 173bp (+7); Italy 390bp (+14); Spain 420bp (+12).

EUR swap curve 2-5 YRS 46,6bp (+0,4); 5-10 YRS 71,3bp (-0,4) 10-30 YRS 26,8bp (-0,4).

2 YRS German BKOs closed 0,13% (-1) and 5 YRS OBLs 0,65% (-1).

Main at 145 from 142 (2,0%); Financials at 255 after 249 (2,3%). SovX at 282 from 279. Cross at 684 from 673.

Stoxx Futures at 2223 / -1,9% (from 2267) with the S&P at 1384 (from 1385, at European close).     

VIX index at 18,7 after 18,6 yesterday same time.                                                                               

EUR 1,313 after 1,312

ECB deposits stable at EUR 757bn

Oil 102,4/118,7 (WTI/Brent) from 103,7/117,8 (-1,2%/+0,8%). Gold at 1649 after 1639 (+0,6%). Copper at 362 from 363 (-0,2%). CRB closes 300,0 from 301,2 (-0,4%).

Baltic Dry finally 1028 (+2.2%)

All levels European COB 17:30 CET

Tomorrow:

Just German IFO expected at 109.5 after 109.8

Germany: IFO on Fri

France: Running up to first round of presidential elections.

US Nothing on Friday

Asia: Nothing really on the plate in China, likewise for Japan.

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

http://youtu.be/vIbcqgXh5-4