Daily US Opening News And Market Re-Cap: June 21

Tyler Durden's picture

From Ran Squawk:

  • Anticipation of the Greek government passing through today's confidence vote successfully witnessed a re-emergence of risk-appetite in early European trade
  • Fitch said that it would regard both a Greek sovereign debt swap and a rollover of maturities, even a voluntary one, as a default
  • BoE's Fisher said more QE is still very much on the table as a possible policy action
  • The ECB allotted EUR 186.942bln in its weekly refinancing operation vs. Exp. EUR 135bln

Market Re-Cap
 
Anticipation of the Greek government passing through today's confidence vote successfully witnessed a re-emergence of risk-appetite in early European trade. This provided support to EUR during the session, witnessed strength in equities, and Eurozone 10-year government bond yield spreads narrowed across the board. However, EUR/USD did come under some pressure following much worse than expected German ZEW survey results, whereas Euribor futures received support after the ECB allotted higher than expected amount in its weekly refinancing operation. In other news, GBP weakened following dovish comments from BoE's Fisher, who said that further quantitative easing is still an option.
 
Moving forward, markets look ahead to existing home sales data, allied with API inventories figures from the US later. In fixed income, another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Dec'16-May'18, with a purchase target of USD 4-5bln is scheduled for later in the session. Moreover, any comments pertaining to the Greek debt situation or the vote of confidence will be keenly watched.
 
Asia Headlines:
 
Japanese finance minister Noda said he wants to work on building a consensus to double the nation’s 5% sales tax as his country tries to contain the largest debt burden in the world. (Sources)
 
US Headlines
 
Fitch said it would place the US credit rating on watch negative if its debt ceiling is not raised by August 2nd, when the US Treasury has warned that it may not be able to borrow more. Fitch said if US does not meet the August 15th coupon payment, US rating will be moved to restructured default. Fitch said it expects US sovereign default to be cleared promptly adding that after a sovereign default; US Is unlikely to regain its AAA rating. However, Fitch said it is very likely the US debt ceiling would be raised and default to be avoided. (RTRS)
 
Also, according to Zerohedge, CME cut Treasury futures margins by 30% in under three weeks despite a 20% jump in volatility. (ZeroHedge)
 
EU and UK Headlines:
 
Eurozone finance ministers gave Greece two weeks from Monday to approve further spending cuts and tax increases in exchange for another EUR 12bln in emergency loans. After two days of crisis talks, the ministers effectively issued Athens an ultimatum, saying the Greek government, parliament and broader society had until July 3rd to approve a new austerity package. (RTRS)
 
In other news, a ZEW economist said financial market experts see more and more evidence that boom of German economy may weaken during months to come, adding that there is a strong commitment to financing Greek debt in Europe. (RTRS)
 
Elsewhere, BoE's Fisher said the central bank may do a lot more QE if the economy gets stuck in a deflationary rut, adding that more QE is still very much on the table as a possible policy action. Fisher further said that UK’s economic outlook is uncertain, and risks exist both from inflation expectations and weak growth. He also said that it is harder for policymakers to tackle deflation than inflation. (RTRS)
 
•    Eurozone ZEW Survey (Economic Sentiment) -5.9 vs. Exp 6.1 (Prev. 13.6)
•    German ZEW Survey (Economic Sentiment) (Jun) M/M -9.0 vs. Exp. -3.0 (Prev. 3.1)
•    German ZEW Survey (Current Situation) (Jun) M/M 87.6 vs. Exp. 90.0 (Prev. 91.5)
•    UK Public Finances (PSNCR) (May) M/M 11.1bln vs. Exp. 6.6bln (Prev. 3.3bln Rev. to 3.5bln)
•    UK Public Sector Net Borrowing (May) M/M 15.2bln vs. Exp. 16.5bln (Prev. 7.7bln) (RTRS)
•    Spanish 3-month T-Bill auction for EUR 0.63bln, bid/cover 9.49 vs. Prev. 6.59 (yield 1.568% vs. Prev. 1.380%)
•    Spanish 6-month T-Bill auction for EUR 2.36bln, bid/cover 3.84 vs. Prev. 5.46 (yield 1.776% vs. Prev. 1.766%)
•    Greek 13-week T-Bill auction for EUR 1.625bln (incl. EUR 375mln in non-competitive bids), bid/cover 2.94 vs. Prev. 3.30 (yield 4.62% vs. Prev. 4.060%)
•    UK Conventional Gilt auction for GBP 4.75bln, 2.00% Jan'16, bid/cover 1.56 vs. Prev. 1.82 (RTRS)
 

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