Better late .....here is all you need to read.
Appetite for risk was observed during the Asian and European sessions on enhanced prospects that the eight-day deadline given by the G-20 leaders to resolve an ongoing Eurozone debt crisis would bring some positive outcome before the EU leaders' summit on October 23rd. Nikkei (+1.41%) closed higher and European equities also received a boost, with financials as one of the better performing sectors, which was further helped by comments from Moody's that accelerating talks to recapitalise European banks are credit positive for the banks. News that China has offered to spend tens of billions buying European infrastructure projects and government debts strengthened the appetite for risk. However, later in the European session, comments from the German finance minister and a German government spokesman that a concrete solution for the Eurozone crisis couldn't be found by the EU summit dented risk-appetite. In the forex market, after trading lower during early European trade, the USD-Index ventured in positive territory, which in turn weighed upon EUR/USD, GBP/USD and commodity-linked currencies, however GBP did receive support following a sharp jump in the Rightmove House Prices from the UK overnight. In other news, CHF received a boost across the board following market talk that SNB's president Hildebrand may resign, whereas CAD received support on news that the Canadian finance minister and the Bank of Canada governor may go beyond inflation-beating monetary policy measures. Moving into the North American open, markets will look ahead to key economic data from the US in the form of Empire manufacturing, industrial production and capacity utilisation.
A new study concludes that so far, oil exporters were winners and oil importers losers of Arab Spring. In aggregate, the Arab Spring has actually provided a positive economic boost across the region worth almost $39 billion.
Countries and regions most likely to have armed riots based on the Conflict Intensity Index
- S&P downgraded the long-term sovereign rating of Spain by one notch to AA- from AA with a negative outlook
- Fitch placed five major European commercial banks – namely, Barclays, BNP Paribas, Credit Suisse, Deutsche Bank and Societe Generale - on credit watch negative
- Strong corporate earnings from Google boosted appetite for risk during the European session
- The French/German 10-year government bond yield spread widened to a record level on concerns surrounding the impact of an EFSF leveraging on the French sovereign ratings
- Market participants keep a close eye on the outcome of the confidence vote in the Italian Parliament. In latest news, according to ANSA, Berlusconi has enough votes to win the confidence vote
Jobless Claims 1K "Better" Than Expected 405K, To Be Revised To "Miss" Next Week; Record Trade Deficit With ChinaSubmitted by Tyler Durden on 10/13/2011 08:45 -0400
In today's weekly dose of BS from the BLS, we get the previous week's massive beat of 401K revised to 405K, cutting the 410K estimate beat in half. But what is important is that the expectation for this week of 405K was once again "massively beaten" by a whopping 1K at 404K. Of course, next week this number will be revised to 408K meaning the consensus was missed but no robots will care. As for the non-noise, non seasonally adjusted claims soared by 66,442 in the week from 332,394 to 398,836. Spin cycle to commence imminently. In some modestly good news, the "cliffers", those on EUCs and Extended benefits, which have declined by 1.3 million in the prior year, increased modestly by 2K, meaning those playing Xbox and collecting benefits actually rose for the week. In other news, the Trade Balance came in line with expectations, at a deficit of 45.6 billion. However, last month's number which gave all the banks hope that Q3 GDP was going to be a whopping beat and got so many Lemmings to re-revise their GDP forecast higher, was reduced from -44.8 billion to -45.6 billion, meaning Q3 GDP is right back down where it belongs. Most notably, the Chinese trade deficit hit a politically convenient record, increasing from $27.0 billion in July to $29.0 billion in August. Exports increased $0.2 billion (primarily soybeans, fish and shellfish, and nonferrous metals) to $8.4 billion, while imports increased $2.2 billion (primarily other household goods and toys, games, and sporting goods) to $37.4 billion. Expect Chuck Schumer's head to explode in 5...4...3...
- Political and debt concerns surrounding Italy together with a downbeat ECB’s monthly bulletin promoted risk-aversion
- Gilts received support following a well-received conventional Gilt auction from the UK, together with comments from BoE's Bean in favour of further QE
- The USD-Index gained amid risk-averse trade, which in turn weighed upon EUR/USD and GBP/USD
- The third quarter corporate earnings from JP Morgan beat on the EPS and revenue
- EU Bank Risks ‘Rapidly’ Growing, Andersson Says (Bloomberg)
- Inside the Fed Fight Over Bond Buys (Hilsenrath)
- France ready to give banks public capital (FT)
- Berlusconi Will Defend Government in Parliament as Confidence Vote Looms (Bloomberg)
- Germany urges treaty to strengthen bloc (FT)
- China's Appetite for Commodities Wanes (WSJ)
- China Exports Slow on ‘Severe Challenges’ (Bloomberg)
- Fed’s Plosser: Operation Twist is fiscal policy (Reuters)
The Slovak Parliament rejected the EFSF ratification bill late yesterday, which spurred risk-aversion overnight and in early European trade. However, in a stark reversal of fortunes, market sentiment changed following news that a new bill could be introduced in the Slovak Parliament as soon as this afternoon. Also, markets took positively comments from Chancellor Merkel who said that the EFSF changes will get full approval before the EU summit on the 23rd October, as well as a much lower than anticipated USD-allotment in the ECB's 3-month USD-operation, which waned some concerns surrounding the Eurozone banks' funding. Strength in equities weighed upon Bunds, whereas the Eurozone 10-year government bond yield spreads with respect to Bunds narrowed across the board. Bunds came under further pressure following a "technically uncovered" 30-year bond auction from Germany. Elsewhere, moving into the North American open, WTI and Brent crude futures ventured in positive territory as risk-appetite gathered pace and the USD-Index weakened... Moving into the North American open, markets look ahead to minutes from the FOMC meeting of 20th-21st September, together with the API inventories report. Any comments pertaining to the EFSF ratification in Slovakia will also be keenly watched. In terms of fixed-income, USD 21bln 10-year Note auction, allied with Fed's Outright Treasury Coupon sales in the maturity range of Mar'13-Oct'13, with a sale target of USD 8-9bln are scheduled for later in the session.
Ignore Slovakia: everyone has a price. This is the real news:
- RPT-SAUDI EMBASSY IN U.S. SAYS PLOT IS "DESPICABLE VIOLATION" OF INTERNATIONAL NORMS
- SAUDI OFFICIAL SAYS IRAN PLOT TO ASSASSINATE SAUDI AMBASSADOR "IS NOT GOING TO PASS EASILY"
- IRAN REJECTS AS "PRE-FABRICATED SCENARIO" US ACCUSATION ON TWO IRANIANS ALLEGEDLY PLOTTING AGAINST SAUDI ENVOY - STATE TV
Take home: Talk is cheap but Brent here is even cheaper... Either way, it is a win win for Saudi which needs crude to go up in price.