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Daily US Opening News And Market Re-Cap: June 16
From Ran Squawk:
- Risk-aversion remains the dominant theme, with particular emphasis on Greece
- According to Eurozone and banking sources, Germany is pushing to delay the second rescue package for Greece until September, which was later reiterated by a German government source
- IMF's Zhu said the IMF is very concerned by Greece, and the situation has changed dramatically in the last 24 hours. However, EU's Rehn said he is confident that Greece will get the next tranche in July, and will be able to avoid a default
- There are growing signs of diminishing confidence in the Greek PM Papandreou, as the number of deputies resigning from the ruling party grows. The PM is chairing a meeting of lawmakers at 1630 local time today
- A sharp decline in retail sales data from the UK weighed on GBP/USD
- The IEA raised its 2011 oil demand forecast, which provided support to WTI crude futures
Market Re-Cap
Greek debt concerns continued to dominate the market sentiment, with latest comments from IMF's Zhu that the situation in Greece has changed dramatically in the last 24 hours promoted further risk-aversion. Allied to this, comments from Eurozone and banking sources that Germany is pushing to delay the second rescue package for Greece further dented risk-appetite. There are growing signs of diminishing confidence in the Greek PM Papandreou, as the number of deputies resigning from the ruling party grows. As a consequence, European equities traded in negative territory during the session, which supported Bunds, and Eurozone peripheral 10-year government bond yield spreads widened across the board. In the forex market, the USD-Index remained in positive territory, which in turn weighed on EUR/USD and GBP/USD. GBP/USD came under further pressure following an unexpected decline in retail sales figures from the UK, which led the pair tumble around 60 pips after the release.
Moving forward, developments in Greece remains the focus today, however markets also look ahead to key economic data from the US in the form of jobless claims, housing data, and Philadelphia Fed. In fixed income, 30-year TIPS refunding announcement, allied with another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Jun'15-Nov'16, with a purchase target of USD 4-5bln are also scheduled later in the session.
Asia Headlines:
Sentiment among Japanese manufacturers rose in June for the second straight month and is seen improving further in the coming quarter, underlining prospects for the economy’s recovery from the March 11 earthquake, according to The Monthly Reuters Tankan poll, which has a 95% correlation with the BoJ’s closely watched quarterly Tankan survey. (RTRS)
Elsewhere, an interest rate increase in China isn’t “far away” as not doing so would do more harm to the economy. Also, the yield on PBOC’s 3-month bills unexpectedly rose by around 8 BPS, suggesting to many market participants that another benchmark interest rate rise may be on the way. However Credit Suisse said China’s one-year lending rate may climb to 7.16% by year-end, versus its previous forecast of 7.66% in March. (Economic Information Daily/ RTRS/ Sources)
US Headlines
The number of US homes seized by banks fell in May as processing delays continued to hamper foreclosures, according to a survey by RealtyTrac. The survey showed that banks took over 66,879 homes last month, down 4% from April and a drop of 29% from a year earlier. (RTRS)
Also, Pimco’s Bill Gross said the Fed next week could signal that interest rates could be capped if warranted due to soft economic growth, adding that “QE3 is likely to take the form of extended period language or interest rate caps on 2-3 year Treasuries”. (RTRS)
EU and UK Headlines:
• Eurozone CPI (May) M/M 0.0% vs. Exp. 0.0% (Prev. 0.6%)
• Eurozone CPI (May) Y/Y 2.7% vs. Exp. 2.7% (Prev. 2.8%)
• Eurozone Employment (Q1) Q/Q 0.0% vs. Prev. 0.1% Rev. to 0.2%
• UK Retail Sales (May) M/M -1.4% vs. Exp. -0.6% (Prev. 1.1%)
• UK Retail Sales (May) Y/Y 0.2% vs. Exp. 1.5% (Prev. 2.8%, Rev. to 2.4%) (RTRS)
• Spanish bond auction for EUR 1.326bln, 4.30% 31-Oct-2019, bid/cover 2.13 vs. Prev. 2.12 (yield 5.352% vs. Prev. 3.887%)
• Spanish bond auction for EUR 1.513bln, 5.90% 30-Jul-2026, bid/cover 2.57 (yield 6.027%) (RTRS)
Full report:
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More confirmation of widespread radiation contamination in Japan, just now being 'looked for' and of course found months into the 'situation'.
From NHK:
Radioactive material detected in Iwate pastures
The Iwate Prefectural Government has again detected a radioactive substance above the state limit in pasture grass in several areas in the prefecture. The prefecture asked farmers in the areas to refrain from feeding the grass to their livestock.
The prefectural government found on Tuesday radioactive cesium exceeding the limit of 300 becquerels per kilogram in grass collected from pastures in four areas, including Tono and Otsuchi. The areas are located about 150 to 200 kilometers north of the Fukushima nuclear power plant.
The Iwate government plans to conduct more detailed examinations in the four affected municipalities.
The testing comes after cesium exceeding government standards was measured in pasture grass collected in two areas in the southern part of the prefecture earlier this month.
The Iwate government also took closer measurements of radiation levels in grass harvested in nine districts of the two areas. The government found the levels of radioactive cesium exceeded the criteria in six districts.
High levels of radiation in pasture grass have also been reported in Fukushima Prefecture, which hosts the troubled nuclear plant, and neighboring prefectures.
Thursday, June 16, 2011 12:07 +0900 (JST)
Provided support for CL? Down $4. I think not.
Looking for a nice rebound here -- 1320 by 6/23. http://pebblewriter.blogspot.com/2011/06/fan-me.html