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Daily US Opening News And Market Re-Cap: July 12

Tyler Durden's picture




 

From Ran Squawk

  • The mood of Eurozone finance ministers is tilting towards more flexibility in restructuring of Greek debt
  • Dutch finance minister said a selective default for Greece is not excluded anymore, however Belgium have said they see no country defaulting
  • According to an article in the ABC newspaper, citing unnamed sources, as many as six Spanish banks have failed the European stress tests, including five savings banks and one medium-sized bank
  • Successful T-Bill bill auctions from Italy, Belgium and Greece helped equities and EUR to come off their worst levels, allied with unconfirmed market talk of the ECB and China buying in the European debt

 Market Re-Cap
 
Risk-aversion remained the dominant theme during the early European session on the back of fears of contagion to core Eurozone countries from the peripherals. The mood of Eurozone finance ministers tilting towards more flexibility in restructuring of Greek debt, and with the Dutch finance minister not negating a selective default for Greece exacerbated the risk-averse tone. Moreover, an article in the ABC newspaper, citing unnamed sources, that as many as six Spanish banks have failed the European stress tests, including five savings banks and one medium-sized bank, also weighed on sentiment. European equities, led by financials, traded lower in early trade, which supported Bunds as the Italian 10-year bond yield crossed the 6% mark for the first time since 1997. However, a reversal of sentiment was observed as the session progressed, supported by market talk of the ECB and China buying in the European bonds, together with successful T-Bill auctions from Italy and Greece, which observed narrowing of the Eurozone peripheral 10-year government bond yield spreads. Elsewhere, GBP/USD plummeted around 70 pips following lower than expected CPI figures from the UK, which also provided strength to Gilts.
 
Moving into the North American open, markets look ahead to key economic data from the US in the form of trade balance, and IBD/TIPP economic optimism, as well as the FOMC minutes later in the session. In fixed income, USD 32bln 3-year Note auction is also scheduled for later.
 
Asia Headlines:
 
BoJ Target Rate (Jun) M/M 0.10% vs. Prev. 0.10% (RTRS/Sources)
The BoJ revised up its assessment of the economy, encouraged by a pickup in factory output and the prospects for recovery in business sentiment. BoJ says Japan’s economy will resume moderate recovery from latter half of fiscal 2011/12. Worries about supply chains are easing and uncertainty rising somewhat on long-term power supply constraints. BoJ says need to continue watching Europe sovereign debt woes and impact of balance sheet adjustments in the US economy.
 
US Headlines
 
There was no movement on a dispute over revenues in debt talks between President Obama and congressional leaders at the White House on Monday, a Democratic official familiar with the meeting said. Meanwhile, Democratic congressional leaders made clear in talks lead by President Obama that there would not be votes from their side to pass a deficit-cutting bill if it contained only spending cuts, Democratic officials familiar with the talks said. Also, speaker of the House of Representatives Boehner pushed for immediate spending cuts at Monday’s debt reduction meeting with President Obama and fellow congressional leaders, a Republican aide said. (RTRS)
 
•    US NFIB Small Business Optimism (Jun) M/M 90.8 vs. Exp. 91.2 (Prev. 90.9) (RTRS)
 
EU and UK Headlines:
 
Eurozone finance ministers said reaffirmed commitment to safeguard stability in the Eurozone and demonstrated their readiness to adopt further measures to improve Eurozone systemic capacity to resist contagion. They said this includes enhancing flexibility and scope of EFSF rescue fund, steps also include lengthening maturities of loans and lowering interest rate on loans. ECB confirms its position that credit event or selective default should be avoided. Eurozone finance ministers have tasked a working group to propose measures to reinforce current policy response to the Greek crisis. (RTRS)
 
•    UK CPI (Jun) Y/Y 4.2% vs. Exp. 4.5% vs. (Prev. 4.5%)
•    UK RPI (Jun) Y/Y 5.0% vs. Exp. 5.2% (Prev. 5.2%)
•    UK DCLG UK House Prices (May) Y/Y -1.6% vs. Prev. -0.3%
•    UK Visible Trade Balance (GBP/mln) (May) M/M -8478 vs. Exp. -7336 (Prev. -7389, Rev. to -7643)
•    UK BRC Like-for-Like Sales (Jun) Y/Y -0.6% vs. Exp. -1.4% (Prev. -2.1%)
•    UK RICS House Price Balance (Jun) M/M -27% vs. Exp. -25% (Prev. -28%) (RTRS)
•    Italian 12-month BOT auction for EUR 6.75bln, bid/cover 1.55 vs. Prev. 1.71 (yield 3.670% vs. Prev. 2.174%)
•    Greek 26-week T-Bill auction for EUR 1.25bln, bid/cover 2.88 vs. Prev. 2.58 (yield 4.900% vs. Prev. 4.960%)
•    Belgian 3-month T-Bill auction for EUR 1.645bln, bid/cover 1.20 vs. Prev. 2.97 (yield 1.305% vs. Prev. 1.313%)
•    Belgian 12-month T-Bill auction for EUR 1.070bln, bid/cover 1.54 vs. Prev. 2.18 (yield % vs. Prev. 1.884%) (RTRS)

Full report:

 

 

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Tue, 07/12/2011 - 08:21 | 1447222 ZeroPower
ZeroPower's picture

13:18 12Jul11 RTRS-EUROPEAN COUNCIL PRESIDENT ROMPUY SAYS CHALLENGES FACED BY SPAIN NOT SAME AS OTHER EUROZONE COUNTRIES
13:19 12Jul11 RTRS-EUROPEAN COUNCIL PRESIDENT ROMPUY SAYS THE EURO IS STABLE AND SOLID CURRENCY

Ah, EUR pumping to the rescue.

Tue, 07/12/2011 - 08:23 | 1447227 Bohemian Clubber
Bohemian Clubber's picture

give me an E! give me an U!

EU! EU! EU!

 

Tue, 07/12/2011 - 08:35 | 1447247 snowball777
snowball777's picture

Ewwww.

Tue, 07/12/2011 - 08:45 | 1447259 Sudden Debt
Sudden Debt's picture

And as usual... the American are trying to steal the spotlight yet again...

US Trade Deficit Jumps More than Expected, At $50.23 Billion in May, Largest Since October 2008

down also goes the dollar.

 

Tue, 07/12/2011 - 08:24 | 1447229 Bohemian Clubber
Bohemian Clubber's picture

This UK inflation number is very ukish

 

Tue, 07/12/2011 - 08:35 | 1447246 snowball777
snowball777's picture

Chin up, old chap.

Tue, 07/12/2011 - 08:36 | 1447249 snowball777
snowball777's picture

The mood of Eurozone finance ministers is tilting towards more flexibility in restructuring of Greek debt

Roubini had it right a year ago...an orderly default then was the only viable option to save the core.

Tue, 07/12/2011 - 08:43 | 1447268 Sudden Debt
Sudden Debt's picture

orderly default

a orderly evacuation goes well untill somebody starts to yell FIRE!

 

Tue, 07/12/2011 - 08:41 | 1447263 BeerWhisperer
BeerWhisperer's picture

OT:

Trade Gap Info anyone? Consesus is 44.1 High End is 48

Nothing reported yet that I see...

Tue, 07/12/2011 - 08:43 | 1447266 BeerWhisperer
BeerWhisperer's picture

Nevermind! Tyler to the rescue. 50.2 !!!!!!!!

Tue, 07/12/2011 - 08:55 | 1447301 Atomizer
Atomizer's picture

Against this background, authorities from around the world are pushing for two significant changes in the post-trade infrastructure for OTC derivatives. Both should be implemented by the end of 2012.

First, OTC derivatives will need to be reported to a trade repository (TR), which is an electronic registry that keeps a record of all relevant details of an OTC derivative transaction over its lifetime. If all trades are reported to a TR, and the information is made available to the relevant supervisory authorities, then these authorities will be able to gain an overall view of the OTC derivatives markets, including the most important (gross and net) positions taken by the major dealers in these markets. If TRs had existed before the crisis, the build-up of huge derivative positions, such as those at American International Group (AIG), would have been observed much earlier.

Second, clearing OTC derivatives through a CCP instead of bilaterally can bring about several benefits from a financial stability perspective. A CCP interposes itself between the two original counterparties of a financial transaction. In other words, the CCP isolates the original counterparties from each other should one of them default. Thus, it makes financial institutions less interconnected. However, since risks become concentrated in the CCP, the CCP itself needs to be highly robust: it must protect itself against the default of one or more of its members. To that end, the CCP requires its members to regularly adjust their collateral at the CCP.

http://www.bis.org/speeches/sp110711.htm

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