Key Events In The Weeks Ahead
The following is a comprehensive list of key events to watch over the next several weeks – events that could have very significant bearing on how the euro sovereign debt crisis evolves.
End September: Moody’s due to conclude review of Spanish sovereign rating. Moody's was planning to conclude its review by the end of September with “the size and terms of the banking support package, including the potential size of the government’s liability” being a key driver in the decision. As governments have not made progress fleshing out a direct recapitalisation facility — indeed, have created some ambiguity as to whether it will be non-recourse — there is a distinct risk that Moody's decides to downgrade Spain. Moody’s currently rates Spain Baa3, the lowest investment grade rating. Also see article on Spain in this issue of Focus Europe.
28/29 September: EU Socialist Leaders Conference. In Brussels.
1 October: September PMI manufacturing survey. Will provide a useful indicator of the situation in manufacturing in the last month of Q3 in ‘non-core’ countries like Italy and Spain. The flash estimate implies weakness in services rather than manufacturing.
2 October: Greece auction. Bills
2 October: Spain conference of regional heads of government. The fiscal negotiations between Madrid and regional governments and the call for early elections in Catalonia (see 25 November entry) have placed renewed market emphasis on the Spanish regions. The two items on the meeting’s agenda are the current economic situation and the future of the EU but reform of the current regional financing system is likely to be discussed.
3 October: September PMI services survey.
4 October: Spain auction. Bonds
4 October: ECB Governing Council meeting, followed by the interest rate announcement and press conference. Another occasion for the ECB to consider the stance on policy, both standard and nonstandard. We expect no rate changes as a refi cut would be hard sell to the Governing Council due to concerns about rising inflation expectations, above all in Germany, following likely OMT.
8 October: ESM Board of Governors meeting. Following the conditional approval of the ESM by the German Constitutional Court, Eurogroup President Juncker called the first meeting of the Board of Governors of the ESM for 8 October. On 27 September the German President ratified the ESM Treaty after euro zone officials issued a statement reaffirming the conditions set out by the German Constitutional Court. The ESM should thus become operational by mid October as countries have two weeks to pay in the first two tranches of paid-in capital, worth EUR32bn in total, supporting EUR200bn of lending commitments.
8-9 October: Eurogroup/ECOFIN finance ministers meetings. Our expectation is that some compromise will be found to bring some relief to Greece. Exit will be avoided. However, based on comments from Eurogroup President Juncker on 14 September the Troika conclusions on Greece are unlikely to be made in the first half of October but “hopefully” not as late as November. This points towards the EU leaders’ summit on 18-19 October as the most likely time for decisions. The October ECOFIN meeting was also when decisions were due to be taken on how to reduce the Irish legacy bank funding costs, for example, through swapping the promissory notes for EFSF bonds. This current sounds too ambitious a timeframe also.
9 October: Annual IMF/World Bank meetings.
9 October: Greece auction. Bills
10 October: Hollande to meet Rajoy. French President Hollande to meet Spanish PM Mariano Rajoy in Paris.
10 October: Italy auction. Bills
11 October: Italy auction. Bonds
16 October: Spain auction. Bills
16 October: Greece auction. Bills
18 October: Spain auction. Bonds
18-19 October: EU leaders' summit. This is emerging as being the key political date for the EU to conclude the review of the Greek loan programme. Likely to be on the agenda for this meeting are the proposals for a common supervisory regime for banks under the ECB -- this will be the basis for a direct bank recapitalisation mechanism in the future and the second and more detailed euro integration roadmap from Van Rompuy, Barroso, Juncker and Draghi.
21 October: Spanish regional elections. The Basque Country and Galicia hold elections.
23 October: Spain auction. Bills
26 October: Italy auction. Bonds
28 October: Finnish municipal elections. Markets will be particularly attuned to the fortunes of the anti-EU True Finns party. In the last municipal elections in 2008, the True Finns party increased its proportion of the vote from 0.9% to 5.4%. Opinion polls this summer have put the party's support in the 11-16% range. This would be a less substantial swing to the TF compared to the parliamentary elections in April 011 when the proportion of the vote compared to the preceding election increased from 4.1% to 19.1%. In quotes on Bloomberg on 31 August 2012, Finnish PM Katainen tried to allay fears: Rescues “are difficult in all countries, Finland is no exception”. “We’ve taken part in all bailouts and we will continue to act responsibly. We’re looking for ways that don’t increase joint liability, but we do want to resolve the crisis”.
29 October: Italy auction. Bills
30 October: Italy auction. Bonds.
end October (tentative): Cyprus Troika review. The Governor of the Central Bank of Cyprus has stated that the bank aims to bring bailout negotiations with international lenders to a conclusion by the end of October. This is in line with hopes previously expressed by the Cypriot Finance Minister Vassos Shiarly.
4 November: G20 Finance Ministers and Central Bank Governors. Meet in Mexico.
7 November: European Commission Economic Forecasts.
8 November: Spain auction. Bonds.
8 November: ECB Governing Council meeting, followed by the interest rate announcement and press conference.
12/13 November: Eurogroup/ECOFIN finance ministers’ meetings.
13 November: Italy auction. Bills
13 November: Greece auction. Bills
14 November: Italy auction. Bonds.
15 November: Q3 GDP reports. Eurostat will publish the flash estimate of euro area GDP growth for Q3 2012. Our current estimate in -0.3% qoq.
20 November: Spain auction. Bills
21 November: Spain auction. Bonds
22-23 November: EU Leaders’ Summit. Ostensibly to discuss the EU Budget for 2014-2020, but also an occasion to address crisis policies.
25 November: Catalonia regional election. Early elections for the parliament of the autonomous region called by Arturo Mas, head of the Catalan regional government.
27 November: Spain auction. Bills
27 November: Italy auction. Bonds
28 November: Italy auction. Bills
29 November: Italy auction. Bonds
Source: Deutsche Bank