Archive - Dec 8, 2010

There is only so long that the Bundesbank can keep ignoring the fact that it has recently started piling on failed auction after failed auction. Today, Germany tried to sell €5 billion in 2 Year 1% Schatz notes. And while the official tally on the auction was a 1.1 Bid To Cover at a 0.92% average yield, just above our own 3 Year auction yesterday, (and a drop from the 1.4 previously) this was yet another failed auction, as the bank managed to get only €4.33 billion in competitive and non-competitive bids. The kicker: the Bundesbank retained €995 million of the issue, a whopping 20% of the proposed issue size - this is the amount it could not find any buyers for, and the deficit to what have been a non-failed auction. In other words, after the entire world was rushing to buy German paper, suddenly there is nobody willing to get in.

• Asian stock markets mostly lower after muted performance on Wall Street, oil slides.
• China purchases $3.1B of Japanese bonds as Yen beats Dollar, Euro.
• Euro slips to $1.3209 amid ongoing worries about eurozone finances.
• Consumer credit in US unexpectedly increased in October for second month.
• German exports down 1.1 percent in October following previous month's strong rise.
• Japan’s October machinery orders fell 1.4% from month before. Cons est. 0.1% decline.
• Job openings in US increased in October by 351,000 - the most since Aug 2008.
• Most Asian stocks rise; Won drops on North Korea shelling, Treasuries fall.

• Germany Trade Balance 14.2B - lower than expected
• Bachus picked to chair financial panel (Reuters)
• China’s CPI expected to hit 3.2% in 2010 (China Daily)
• Bond Vigilantes May Thwart Tax Deal (Barrons)
• U.S. sends more subpoenas in insider trading probe (Reuters)
• Banks face dark pool battle with Europe's bourses (Reuters)
• Obamanomics Takes a Holiday (WSJ)
• Every Income Group Hit as Budget Increases Taxes and Cuts Benefits (Irish Times)
• Asia's Inflation Worries Damp Holiday Shopping Cheer (WSJ)

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 08/12/10

Retail traders are notoriously wrong at picking market direction/tops and bottoms. Most retail traders very naturally seem to adopt a counter-trend stance and this offers very accurate signals for individuals looking to trade against this group. This daily report is designed to help traders focus their efforts on higher probability pairs.

The most troubling development was the lack of extension in Build America Bonds offered in the Bush tax compromise, and with just over three weeks remaining before they expire, the risk of them maturing without extension is high and the implications of this in muni space are very pervasive.

This could get messy. Fast.