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Futures Rebound On Collapse In Greek Negotiations, After Europe's Largest Derivatives Exchange Breaks
There was a brief period this morning when market prices were almost determined by non-central banks. Almost. Because shortly before the European market open, a technical failure on the Eurex exchange - Europe's largest derivatives market - prevented trading in euro-area bond futures the day after Greek debt talks collapsed. Derivatives which, as a reminder, are no longer used for hedging but to directly "generate alpha" and to trade risk with massive leverage.
Initially, traders were unhappy, "it’s concerning to those wanting to trade given the geopolitical concerns surrounding Greece" said one. "Very unfortunate day to experience problems" added another." But the real reason for today's unexpected market shut down was to avoid early indiscriminate selling of course, following yesterday latest Greek fiasco.
And sure enough, after initially seeing significant downward pressure expressed mostly by the EURUSD, which nobody could capitalize on of course courtesy of the broken Eurex, risk both in Europe and the US has since rebounded courtesy of the ECB, SNB and BIS, led by the EURUSD (because a Grexit threat which according to Commerzbank has been raised from 25% to 50% is bullish for the artificial currency), which is now at yesterday's pre-negotiations highs, and US futures are about to go green.
Aside from market "glitches", which are now to be expected every time there is a less than "priced to perfection" development, focus for the European open largely resided in yesterday’s breakdown in talks between Greece and the Eurogroup after Greek officials rejected a draft proposal which sought to increase the flexibility of the existing bailout programme and extend it by 6 months. This latest update subsequently led to a relatively pessimistic open for Europe, with index futures and Bunds eventually opening lower and higher respectively after a delayed start to Eurex trade. Furthermore, in terms of Greek assets, Greek bonds opened lower with Greek 3y's higher by 176bps to 18.7%, ASE down 4%, Greek banking index down 8.6%, however the ASE pared its losses throughout the European morning, with the Greek banking index residing in positive territory (+3%) as the market anticipates an eventual deal. Of note, JPM suggest outflows of EUR 2bln per week which if continues means there will be no deposits for Greek banks to lend from. This means Greek banks could stop lending in 14 weeks.
Nonetheless, as the session progressed, European equities managed to pull away from their worst levels with Bunds coming off their best levels in a pullback of yesterday’s price action, with a bulk of the move taking place before yesterday’s Eurex close. Furthermore, one thing to bear in mind is that Greek Finance Minister Varoufakis said there will undoubtedly be an agreement on debt discussions and will do everything that is necessary to secure an agreement over the next few days.
Asian markets traded mixed amid dampened risk appetite after yesterday’s Eurogroup and Greek bailout crunch meeting reached an impasse. Nonetheless, the Hang Seng (+0.25%) and Shanghai Comp (+0.76%) outperformed, the latter poised for the best pre-holiday rally since 2007, ahead of the week-long Lunar New Year holiday. Elsewhere, the Nikkei 225 (-0.1%) finished relatively flat just shy of the 18,000 level after recovering earlier losses bolstered by late JPY weakness.
In FX markets, AUD has managed to hold on to its gains after the RBA’s Feb 3rd meeting minutes, which were perceived to be less dovish-than-expected. The central bank failed to provide a clear guidance on its future rate path and largely reiterated comments previously seen. Markets are now pricing a 56% chance of the RBA cutting rates by 25bps in March vs. 74% chance before the release of the minutes. From a data perspective, the main release so far has been that of UK CPI with both the Y/Y and M/M printing a record low (Y/Y 0.3% vs Exp. 0.4%, M/M -0.9% vs Exp. -0.8%). Nonetheless, GBP actually saw a bout of strength following the release, given the inflation levels were very much in-fitting with the findings of the BoE’s QIR.
Elsewhere, EUR saw some broad-based strength after EUR/GBP tripped stops through 0.7400 to the upside heading into the UK CPI report, while German and Euro-zone ZEW data failed to impact EUR, but did see Bunds continue to edge below 159.00.
In the commodity complex, gold and silver weakened overnight as prices halted a 3-day consecutive advance, with buying from China expected to dwindle heading into the week-long Lunar New Year holiday. Copper traded relatively range-bound with prices managing to eke out mild gains as stimulus hopes for China increased following more poor data from the world’s largest copper consumer which showed property prices fell by 5.1%, its largest decline on record.
In energy markets, WTI and Brent crude futures have traded in the green throughout the session underpinned by a weak USD and weekend comments from Kuwait oil minister who suggested oil will continue to recover in H2.
Summary: European shares rise from intraday lows to trade little changed with the travel & leisure and tech sectors underperforming and basic resources, oil & gas outperforming. Talks between Greece and its creditors ended abruptly Monday night, Greece rejected European proposals to stick to the existing terms of its bailout. U.K. inflation slows more than forecast to record low. Chinese new-home prices recorded biggest y/y decline ever. European car sales growth accelerated in January. Indonesia unexpectedly cuts rate. The Swedish and German markets are the worst-performing larger bourses, the Italian the best. The euro is stronger against the dollar. Japanese 10yr bond yields fall; Greek yields increase. Commodities gain, with silver, zinc underperforming and natural gas outperforming. U.S. Empire manufacturing, NAHB housing market index, mortgage delinquencies, mortgage foreclosures due later.
Market Wrap
- S&P 500 futures down 0.2% to 2089.6
- Stoxx 600 little changed at 376.4
- US 10Yr yield down 2bps to 2.03%
- German 10Yr yield up 1bps to 0.34%
- MSCI Asia Pacific down 0.1% to 143.3
- Gold spot down 0.7% to $1222.8/oz
- Eurostoxx 50 -0.5%, FTSE 100 +0.3%, CAC 40 -0.4%, DAX -0.6%, IBEX -0.4%, FTSEMIB +0.3%, SMI -0%
- Asian stocks little changed with the Shanghai Composite outperforming and the ASX underperforming.
- MSCI Asia Pacific down 0.1% to 143.3
- Nikkei 225 down 0.1%, Hang Seng up 0.2%, Kospi up 0.2%, Shanghai Composite up 0.8%, ASX down 0.5%
- Euro up 0.32% to $1.1391
- Dollar Index down 0.1% to 94.11
- Italian 10Yr yield down 3bps to 1.64%
- Spanish 10Yr yield up 1bps to 1.59%
- French 10Yr yield little changed at 0.66%
- S&P GSCI Index up 0.3% to 427.4
- Brent Futures up 1.1% to $62.1/bbl, WTI Futures up 0.9% to $53.2/bbl
- LME 3m Copper down 0.8% to $5705/MT
- LME 3m Nickel down 1.2% to $14430/MT
- Wheat futures up 1.6% to 537.8 USd/bu
Bulletin Headline Summary from Bloomberg and RanSquawk
- European markets retrace some of yesterday’s Greek/Eurogroup sell-off despite yesterday’s breakdown in talks
- UK CPI saw both the Y/Y and M/M printing a record low, however GBP actually saw a bout of strength following the release given the levels were in-fitting with the findings of the BoE’s QIR
- Looking ahead, there is US Empire Manufacturing (1330GMT/0730CST), speakers in the form of ECB’s Noyer (Soft Dove), Fed’s Plosser (Non-Voter, Hawk) and BoE’s Haldane (Neutral)
- Treasuries steady as Greece edged closer to a euro exit after region’s finance ministers said there will be no more talks on financial support unless the Greek government requests an extension of its existing bailout program.
- The standoff between Greece and its creditors risks triggering a simultaneous cash and credit crunch, which could drive the country out of the euro area
- Draghi’s plan to jolt the euro zone out of its economic malaise by buying EU1.1t ($1.3t) of bonds may be hamstrung even before it starts amid a dearth of new supply and a lack of willing sellers
- Britain’s inflation rate fell more than forecast to a record-low 0.3% as food and fuel prices plunged
- German investor confidence as measured by the ZEW Center rose to 53 in February, a one-year high, from 48.4 in January
- A cease-fire in eastern Ukraine is being ignored in the strategic transport hub of Debaltseve, where raging battles risk undermining a fragile peace accord sealed after all-night talks last week in Belarus
- Thousands of people marched through Copenhagen in freezing winds to remember the victims of a weekend shooting that police say may have been an attempt to copy the massacre at Charlie Hebdo in Paris
- A federal judge in Texas has ordered a halt, at least temporarily, to Obama’s executive actions on immigration, siding with Texas and 25 other states that filed a lawsuit opposing the initiatives: NYT
- Sovereign yields mixed; Greece 10Y yield surges ~55bps to 10.21%. Asian stocks gain, European stocks and U.S. equity-index futures mostly lower. Brent and WTI higher, gold and copper decline
US Event Calendar
- 8:30am: Empire Manufacturing, Feb., est. 8.50 (prior 9.95)
- 10:00am: NAHB Housing Market Index, Feb., est. 58 (prior 57)
- 4:00pm: Net Long-term TIC Flows, Dec. (prior $33.5b)
- Total Net TIC Flows. Dec. (prior -$6.3b)
- Mortgage Foreclosures, 4Q (prior 2.39%)
- Mortgage Delinquencies, 4Q (prior 5.85%)
- 12:45pm: Fed’s Plosser speaks in Philadelphia
DB's Jim Reid as traditional concludes the overnight event summary
Perhaps it was never going to be quite close enough to one minute to midnight for an agreement as the two sides held their ground and talks therefore collapsed. The Eurogroup continues to insist on Greece applying for an extension to their existing programme whereas Greece wants a bridge loan ahead of a new deal as they view the current one as having failed.
So where are we left? If there is going to be an extension to the program beyond expiry on 28th February then it has to be agreed by the end of this week to allow ratification by various member state parliaments. There's been talk of another Eurogroup meeting that could be held on Friday but one side would have to back down and listening to the Eurogroup President Dijsselbloem one would think it would have to be Greece. An alternative would be for Greece to apply for a fresh ESM loan post Feb 28th but as Mark Wall pointed out last night, the conditionality would likely be every bit as tough and may meet resistance from member states given its a new loan not an extension of an existing one.
Comments from Greek finance minister Varoufakis after talks ended suggested that Greece would be prepared to extend the current programme so long as the terms are satisfactory. Speaking shortly after, Varoufakis was quoted as saying on Reuters that ‘I have no doubt that, within the next 48 hours Europe is going to come together and we shall find the phrasing that is necessary so that we can submit it and move on to do the real work that is necessary’. Greek press Ekathimerini reported meanwhile that Varoufakis had earlier in the day been happy to sign a communiqué provided by the EC and Monetary Affairs Commissioner Moscovici which allowed for a four-month loan agreement in return for certain conditions, however this statement was later changed in the Eurogroup to an extension of the current program which Varoufakis then rejected. At this point Dijsselbloem then halted the meetings and put the pressure on the Greek side to come forward with a proposal ahead of a possible Friday meeting.
DB’s resident expert George Saravelos suggests the conditions of any extension or new deal are becoming clearer. We know that specific conditions will be mandatory either way through a commitment to fulfill financial obligations, a commitment to not take unilateral actions and a commitment to conclude the programme. In return Greece would be granted ‘flexibility’ potentially around the fiscal path and structural reforms. George also notes that the program conclusion on the 28th February is not the point of no return, but the soonest of when Greek banks are no longer able to access additional ELA at the ECB or when the Greek government runs out of financing. Ultimately George still believes we still have the same three step process for Greece in firstly requesting for a new program, secondly negotiating the substance and thirdly passing this through parliament. The difference now is that time pressure has only increased after yesterday’s outcome. George’s report is attached below for those interested.
In terms of the market reaction post meeting, having traded some +0.2% firmer in the lead up to yesterday’s meeting, the Euro dropped around -0.8% - as headlines started to filter through the wires - to trade at an intraday low of -0.6% versus the Dollar. The currency did pare back some of the losses however but is still -0.5% below the pre-meeting levels at $1.136 as we go to print. The broader risk off tone lent support to Bunds last night with the 10y yield dropping to 0.334% having earlier traded closer to 0.35% pre-meeting. S&P 500 futures this morning are trading some -0.4% softer and 10yr US Treasury yields are 4bps lower. Asian bourses however are generally mixed. The Nikkei (-0.04%) and ASX (-0.52%) are lower although the Hang Seng (+0.24%) and Shanghai Composite (+0.80%) are firmer as we go to print. China property market data continued to be weak but some saw small signs of stabilisation in the data even as prices continued to fall. Chinese markets are closed for a week of holiday as of tomorrow.
Back to markets yesterday, with the US closed for a public holiday the focus was on Europe although in reality it was a fairly subdued trading session with the market somewhat on hold in the lead up to the meeting. Sentiment was lower leading up to the meeting and not helped by pessimistic comments by German finance minister Schaeuble in the lead up. The Stoxx 600 closed -0.14% whilst the DAX (-0.37%) and CAC (-0.16%) finished lower. Greek equities meanwhile finished 3.83% lower and 3y yields widened 175bps. Data took a backseat to the Greece events as the Euro-area reported a larger than expected trade surplus (€23.3bn vs. €19bn expected). In terms of oil, brent (-0.2%) meanwhile was more or less unchanged.
Elsewhere, conflict in the Ukraine appears to be continuing with the first reported deaths announced yesterday since the ceasefire officially commenced. Reuters reported that pro-Russian rebels encircled Ukrainian government forces with Kiev saying that they would not pull back heavy guns whilst a truce is being negotiated. Russian equities yesterday closed -2.04% weaker although Ukrainian equities (+0.96%) closed higher.
It’s a busier day data-wise today. Starting in Europe we kick off with inflation data in the UK. The ZEW survey for Germany and the Euro-area will also be of focus this morning. With markets open again in the US, we get the NAHB housing market index for February along with the NY Fed Empire manufacturing reading. The Fed’s Plosser will also be due to speak today, specifically on monetary policy.
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Ban derivatives markets already ffs!
Greece and Europe will settle. It's all Bullshit!!!
@500
you need to read this again:
http://www.zerohedge.com/news/2014-12-12/presenting-303-trillion-derivat...
Whoa......that's talking about me.
I want my lawyer now.
Thank goodness for a two party system in which one party can stop this insane crap.
The "Grand Illusion" continues...
The road to financial hell is paved with faux-paper promises... And that road has become a 16 lane super freeway...
Prepare accordingly.
Futures Rebound On Collapse
Pop your Prozac.....and embrace the suck.
Stick your fingers in your ears and chant......naw naw naw.....I can't hear you!!!
The hindenberg Baltic snow index can't scare this thing
Everyone can now clearly see that the rigged markets are completely separated from reality.
It also means that any argument addressing the menace of market instability induced by unsuccessful negotiations between Greece and the EU... is a mere nonsense. Not even worth mentioning, let alone taking into consideration.
Looky how much fun things get when the Mob runs the show!!
There is not enough nail guns in the world for these crooked bastards
Exhibit A for why I focus on what I need to do to survive in the future. This used to bother me.
After some coffee I might have to drop a Plosser!
You're not in the club slave
Russian Tycoon Viktor Vekselberg To Have Swiss Board Manage Global Assets
Putin Gives ‘Order of Friendship’ Award to Rosneft Norwegian Partners….Gratitude to Haliburton, ExxonMobil, Schlumberger
U.S., Finnish Private Equity Firms Capman and Siguler Guff Buy Stake in Moscow Education Testing Firm Maximum Education
Germany Buys Most Coal From Russia Since 2006
Daughter Of Chinese Premier That Supported Tiananmen Square Massacre Had Money Hidden By HSBC Switzerland
Chinese home prices down 5%. Seems like a big deal that no one is talking about.
turn off the markets when they don't do the right thing. open free trading markets, can't have that.
beyond farce, orwellian today, now in your face
Futures? Can anybody tell me how many names in the SnP get hurt when Greese finally does tell the EU bankers to gfy? Apples and oranges?
These guys in Greece are not career politicians.
The Greek lobby is nothing compared as the US so they have no bribe hanging over thier heads.
These guys really think they work for the people of Greece and not the ECB.
And more importantly the people of Greece believe in this government...
The Russians who are getting thier clocked cleaned in the currency world war may just may bail out Greece for what the Greeks believe is a far price. Germany looses, the US looses the IMF ECB FED and the rest of these lame dogs all loose.
I'm buying a ticket to sit on the beach.
tsipras started his career as a student protester starting in highschool, thru college...there never was a time this scumbag wasnt in politicis....and he has done nothing except protesting all the way to the pm office...what do you mean not career pols?
http://www.bbc.com/news/world-europe-18059516
ticket not required - all welcome
Duct tape
"Can I just finish my waffle?" ~ President Obama's remarks on new ISIS strategy...lol.
Forgive my language, but absolute fucking desperation. That is why this WILL blow, who knows when is anybody's guess but it WILL blow.
DavidC
Humans shit, piss and fuck. Who ever came up with the words fornicate, deficate and urinate were hiding the truth.
maybe its a case of no one giving a shit about greece anymore, it's an insignifcant beggar country that should go back to the gutters where it belonged.
this time the germans have it right. if they want help fine, if not fine..europe will be stronger without those lying deadbeats
You're right.But this is about the other PIIGS, not Greece anymore..
maybe its a case of no one giving a shit about greece anymore
You do realize there's a whole long laundry list of countries after Greece.....right?
This game is called dominoes. The Germans should be fine....everyone else is toast.
We all know the game. When unsettling events occur anywhere in the world you goose the us equities and hit gold. Tried and true formula that has worked for years.
Stateside
yes gold and silver down today..go figure...400 billion in actual losses and probably another trillion in off site losses are about to happen in the fiat world...and no one seems to care...
Russia Creates Its Own Payment System
http://www.ianwelsh.net/russia-creates-its-own-payment-system/
``Almost 91 domestic credit institutions have been incorporated into the new Russian financial system, the analogous of SWIFT, an international banking network.''
What a rigged house of cards. I wish this crap would crash and burn
Patience.....they're working on it.
From chaos......comes order.
First we've got to tear down the US......then we we can go for the big prize.
Healthcare and full time jobs....check. Next up......amnesty.
It's almost like someone has been planning this...
We’re on a high-wire.
Should I pay my taxes or buy PMs?
The Jubilee has to be right around the corner.
This isnt about the other southern states, everyone is doing the hard work to reform and cut back gov spending...except greece. No one, not spain, not ireland, not portugal is interested in joining in a 3 way mutual suicide pact with greece..why should they all three are starting to come out of their recessions...same as greece itself under samaras before they elected these commies.
I'd be more sympathetic if the greeks actually acted in good faith and carried thru those reforms (which the greeks themselves over 75% recognize as necessary and long delayed). As it is they've squandered the opportunity and now want another free pile of cash without conditions...they must be nuts. No one, no one will give the greek gov workers an extra 13 month of free salary just because they think they'll get it if they scream loud enough...what are they a bunch of 3 year old welfare queens? all the while cursing the only people who have helped them in the past.
fk them.
1) I wake up.
2) Pull up the interwebz on my phone see this http://finviz.com/futures_charts.ashx?t=ES&p=m5.
3) Laugh my fucking ass off.
4) Thank you Mr. Yellen for the biggest belly laugh to start the day.
5) ?????
6) Profit
1) I wake up.
2) Pull up the interwebz on my phone see this http://finviz.com/futures_charts.ashx?t=ES&p=m5.
3) Laugh my fucking ass off.
4) Thank you Mr. Yellen for the biggest belly laugh to start the day.
5) ?????
6) Profit
And AU is down 8, Ag down 0.6
EVERYTHING IS AWESOME
LIFE IS BEAUTIFUL
OBAMA IS GOD
Tyler durrrrrrrden is a complete stooge. Muppet. Village idiot. On the wrong side of history and truth. The markets prove his perspective wrong on a daily basis, but oh yeah, I'm sure some point hundreds of percent higher there will be a correction of 20% and he'll be sure to remind everyone he was warning about it. Too bad it will take the Dow from 36,000 to 29,000 rendering his perspective worthless for many years and still unprofitable.
Tylerites are not WRONG...we might not be on the money side of the trade...but our theories are not WRONG...they will be proven out in the long term....and when that happens..we will be right..and it will be a big Right...
drip... drip... drip... drip...
Eventually, one little drip of trust will be the "one too many", and the tipping point will be reached. Manufacturing truth works until even those who don't pay attention notice the game. Since the bubble burst in '07, those who have been paying attention know what's going on. But the picture TPTB are so busy on their hamster wheels creating is still good enough to fool those who aren't watching how this works. That won't last forever.
drip... drip... drip... drip...
=== Het VERLEDEN herhaalt zich NOOIT ===
Try to talk about the policies we need in a depressed world economy, and someone is sure to counter with the specter of Weimar Germany, supposedly an object lesson in the dangers of budget deficits and monetary expansion.
http://www.nytimes.com/2015/02/16/opinion/paul-krugman-weimar-on-the-aeg...
Uiteraard heeft @GuusjA volop carnaval gevierd. Het gezag ligt dan namelijk niet meer bij de verschillende burgemeesters, maar is overgegaan op de diverse prinsen. In feite was het DAB-systeem dus al jarenlang tijdens carnaval operationeel. Ook is Carnaval het 'grootste netwerkbijeenkomst van het jaar'. Dus heeft @GuusjA de informatie verspreid dat de kans dat Griekenland uit de eurozone moet treden iets toegenomen, maar nooit geen 50%. Dat de Grieken gisteren verklaarden dat het voorstel van de EU ‘absurd en inacceptabel’ is, past natuurlijk in de gecontroleerde paradigma-wisseling naar het systeem 'Leven en Laten Leven'. Het valt netwerk Juncker al op dat de koers van de euro de laatste weken fluctueert tussen de 1.30 en 1.40 en dat het krakeel tussen de ministers van Financiën totaal geen invloed op de koers lijkt te hebben.
http://www.waarheiddelen.nl/index.html
De eurogroep onder leiding van minister Dijsselbloem stellen zich nu nog op als 'strenge bankiers tegen een onwillige betaler', maar zitten feitelijk op rozen omdat de eurozone als geheel nagenoeg geen schulden heeft. Kort voordat de Europese derivatenmarkt Eurex gisterochtend opende, was er een ‘onverwachte’ technische storing, zodat de handel in euro-obligaties tijdelijk kon worden geblokkeerd, zodat de algoritmes van de supercomputers even niet wisten wat te doen. Nu zijn de ECB, SNB (Zwitserse nationale bank) en BIS (Bank for International Settlements in Basel, de centrale bank der centrale banken) bezig om de voorbereidingen te treffen wanneer een politicus gaat redeneren volgens de 'Logica van de 1'.
http://www.volkskrant.nl/binnenland/nieuwe-hulplijn-radicalisering-ontva...
Het radicaliseren zal dan pas goed op gang komen. De Griekse bevolking haalde de afgelopen tijd uit vrees voor een Grexit opnieuw miljarden van hun bankrekeningen. Volgens JP Morgan wordt er iedere week zo’n € 2 miljard opgenomen en verdwijnt het in de zakken van ...!?!??
In ieder geval gaan dadelijk de gesprekken weer verder; in ruil voor de belofte niet te spreken over de 3e SpinozaGolf, zou de eurozone zich ‘flexibel’ willen opstellen ten aanzien van de andere MuntUnies met betrekking tot de 'geëiste hervormingen' zoals netwerk @GuusjA die voor ogen ziet.