Daily US Opening News And Market Re-Cap: January 8

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From RanSquawk

  • Sources at Hellenic Financial Stability Fund deny reports that Greek banks need additional funds
  • Alcoa to kickoff earnings season after the closing bell

Market Re-Cap

Equity markets recovered from a lower open following press reports overnight by eKathimerini that the country’s main banks are considering requesting additional funds for their recapitalization and edged higher throughout the session after sources at Hellenic Financial Stability Fund said that there no indications that Greek banks need more recap funds. In addition to that, Xinhua reported that chance of China RRR cut is increasing for January, citing industry insiders for RRR cut forecast. This follows on from the reports in ChinaDaily last week, which suggested that a small interest rate cut at the right time could substantially decrease financing costs and improve expectations for profitability, citing researchers from the China Development Bank, the State Information Center and the Shanghai Securities News who have worked together to forecast key economic indicators and policies in 2013. The risk sentiment was also supported by well subscribed debt auctions from the Netherlands, Austria, Greece and Belgium. As a result, peripheral bond yield spreads are tighter by around 5bps in 10s. Going forward, market participants will get to digest the latest NFIB, IBD/TIPP and Consumer Credit reports. The Fed is due to conduct Treasury op targeting Oct'18-Dec'19 (USD 3.00-3.75bln) and the US Treasury is also set to auction USD 32bln in 3y notes.

Asian Headlines

Japanese PM Abe says he will compile government's economic stimulus measures on January 11th. In relation to this, a Japanese economic stimulus package draft released overnight said the government is to closely monitor Forex moves and take appropriate actions when needed.

EU & UK Headlines

German Factory Orders SA (Nov) M/M -1.8% vs. Exp. -1.4% (Prev. 3.9%, Rev. 3.8%)
German Factory Orders NSA (Nov) Y/Y -1.0% vs. Exp. -0.4% (Prev. -2.4%, -2.5%)
The German economy minister says demand for industrial orders seems to be stabilizing, sentiment indicators point to small improvement.

Euro-Zone Retail Sales (Nov) M/M 0.1% vs Exp. 0.3% (Prev. -1.2%)
Euro-Zone Retail Sales (Nov) Y/Y -2.6% vs Exp. -2.1% (Prev -3.6%)

Spain's target for total borrowing this year to 7.5% compared to the forecast set out in September last year to EUR 215-230bln vs. Prev. estimate of EUR 207bln. 2013 net debt issuance target at EUR 71bln.

UK inflation expectations for year ahead fall 2.7% in December from 2.8% in November according to YouGov/Citi. Inflation expectations for the next 5-10 years dropped to 3.3% in December from 3.4% in November.

US Headlines

The Hill writes "US could hit debt-limit deadline as early as Feb. 15, say experts". The United States could face a debt-ceiling crisis as early as mid-February, according to an expert report out Monday. The Bipartisan Policy Center (BPC) estimates that the nation will begin defaulting on its payment obligations between Feb. 15 and March 1, unless Congress raises the USD 16.4tln debt ceiling. Coming on the heels of the "fiscal cliff" crisis, both sides are already gearing up for the next budget fight.

Equities

Equity markets recovered from a lower open following press reports overnight by eKathimerini that the country’s main banks are considering requesting additional funds for their recapitalization and edged higher throughout the session after sources at Hellenic Financial Stability Fund said that there no indications that Greek banks need more recap funds. In addition to that, Xinhua reported that chance of China RRR cut is increasing for January, citing industry insiders for RRR cut forecast. Alcoa is due to kick off the latest earnings season after the closing bell on Wall Street.

ECB funding to Italian banks at EUR 271.8bln in December from EUR 273.3bln in November. Of note, the amount held on deposit at the ECB increased to EUR 3bln from EUR 2.7bln. The breakdown of borrowing also shows that EUR 268.3bln was borrowed via LTROs while only EUR 3.5bln was borrowed via the MRO.

FX

EUR/USD traded steady today, in close proximity to intraday 1.3000 option expiry level , with near side resistance levels noted at 1.3140 (Oct 17th high) and then at 1.3172 (Sep 17th high). The pair was supported overnight by comments from Japanese finance minister Aso who said that Japan are to buy ESM bonds using foreign exchange reserves. He added that ESM purchases will help to stabilize the JPY and that the Japanese government wants to draw up a new written agreement with the Bank of Japan. Nevertheless, USD/JPY failed to benefit from the so-called Abe trade and remains under pressure as market participants book profits following the recent bout of depreciation.

Commodities

Israel's Finance Minister Yuval Steinitz on Monday became the latest member of Israel’s cabinet and national security establishment to visit Washington to press senior US officials to lay out a tougher line on the Islamic Republic’s nuclear activities.

Deutsche bank says oil prices should rise in 2014 to average USD 113.25/BBL for Brent, USD 103.25/BBL for WTI on a full year basis.

Goldman Sachs cuts 2013 natural gas forecast to USD 3.75 per million Btu from USD 4.25 per million Btu because of mild weather.