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Daily US Opening News And Market Re-Cap: August 1
From RanSquawk
- Markets reacted positively to news that the White House and senior Congressional leadership had agreed, in principle, a deal to raise the US debt ceiling. Focus now shifts to whether the deal can pass through the House and Senate before an August 2nd deadline
- GBP came under extensive pressure after manufacturing PMI data from the UK demonstrated a contraction, and reached its lowest level since Jun'09
- European equities traded higher amid renewed risk-appetite, helped by the US debt-deal and strong corporate earnings results from HSBC
Market Re-Cap
Markets reacted positively to news that the White House and senior Congressional leadership had agreed, in principle, a deal to raise the US debt ceiling, which provided support to European equities, and weighed on Bunds, whereas the Eurozone peripheral 10-year government bond yield spreads narrowed across the board. A renewed appetite for risk provided strength to WTI and Brent crude futures, and spot Gold prices came under pressure. Elsewhere, commodity-linked currencies, including AUD, NZD and CAD, remained the prominent beneficiaries at the cost of safe-haven currencies, such as CHF, JPY and USD. In other forex news, GBP came under extensive pressure after manufacturing PMI data from the UK demonstrated a contraction, and reached its lowest level since Jun'09.
Moving into the North American open, the economic calendar remains thin, however markets look ahead to the ISM manufacturing data from the US. With regards to the US debt debate, focus now shifts to whether the US debt ceiling deal can go through the House and Senate before an August 2nd deadline, and any reaction from major rating agencies pertaining to US's sovereign ratings.
Asia Headlines:
According to the PBOC China will continue to maintain a prudent monetary policy and put stabilising prices as a priority. Also, according to the chief economist at the State Information Centre, Fan Jianping, China should use monetary policy less frequently and take a wait-and-see approach to prevent an over tightening of the economy. In other news, China’s inflation in Q3 of this year will likely to hit 5.8%, citing the State Information Centre. The Centre expects the nation’s inflation in Q4 to slow to 5%. (RTRS/Xinhua/China Securities Journal)
• China Manufacturing PMI (Jul) M/M 50.7 vs. Exp. 50.2 (Prev. 50.9)
• China HSBC Manufacturing PMI (Jul) M/M 49.3 vs. Prev. 50.1 (RTRS)
US Headlines
President Obama on Sunday announced a last-minute deal to raise the US borrowing limit and urged lawmakers to do the right thing and approve the proposed agreement to avert a catastrophic default. The White House and both Republican and Democratic leaders in congress said the compromise would cut about USD 2.4tln from the deficit over the next 10 years. Both the Senate and House of Representatives are expected to vote today and in principle a bill could be on Obama’s desk by nightfall. While Senate’s approval is likely, the agreements fate may be less certain in the House. The plan involved a two-step process for reducing the US deficit. The first phase calls for about USD 900bln in spending cuts over the next decade and the next USD 1.5tln in savings must be found by special congressional committee. Congress must act by December 23rd 2011, under the deal. While the deal means US is unlikely to default, it is far from certain whether the plan agreed by the White House and lawmakers goes far enough in reducing the deficit to appease credit rating agency S&P which has threatened to strip America of its top-notch AAA rating. (RTRS)
In other news, the US will likely keep its top-notch credit rating from Moody's for now, despite the "limited magnitude" of the deficit reduction plans being discussed in Washington. However Moody's warned in a report that the confirmation of the Aaa credit will likely come with a negative outlook, meaning there is a risk of a downgrade in the medium term. (RTRS)
EU and UK Headlines:
Greece and other stricken countries will have faster and easier access to tens of billions of euros in European Union funds under a plan to help stimulate their economies. The plan, to be unveiled on Monday, would not involve extra assistance but would ease co-financing rules for Greece, Ireland, Portugal, Hungary, Latvia and Romania so that they would not have to put up as much of their own cash in order to collect EU funds. According to internal calculations, the six countries could see their co-financing costs reduced by about EUR 3bln over the next two years. (FT-More)
• Eurozone Manufacturing PMI (Jul F) M/M 50.4 vs. Exp. 50.4 (Prev. 52.0), lowest since September 2009
• Eurozone Unemployment Rate (Jun) M/M 9.9% vs. Exp. 9.9% (Prev. 9.9%)
• German Manufacturing PMI (Jul F) M/M 52.0 vs. Exp. 52.1 (Prev. 54.6)
• French Manufacturing PMI (Jul F) M/M 50.5 vs. Exp. 50.1 (Prev. 52.5)
• Italian Manufacturing PMI (Jul) M/M 50.1 vs. Exp. 49.0 (Prev. 49.9)
• UK Manufacturing PMI (Jul) M/M 49.1 vs. Exp. 51.0 (Prev. 51.4), lowest since June 2009 (RTRS)
EQUITIES
A deal reached on the US debt ceiling between the White House and senior Congressional leadership waned some concerns surrounding the US sovereign ratings and supported European equities. Furthermore, strong corporate earnings results from HSBC brought positive sentiment in the market, whereas a weakening USD-index helped basic materials and oil & gas sectors. Moving into the North American open, European equities continue to trade higher, with basic materials and technology as the best performing sectors.
FX
Commodity-linked currencies, such as AUD, NZD and CAD, received support amid risk-appetite after the White House and senior Congressional leadership agreed, in principle, a deal to raise the US debt ceiling, whereas weakness was observed in safe-haven currencies, including USD, JPY, and CHF. However, as the session progressed, some reversal of sentiment was observed as markets waited to see if the deal could pass through the House and Senate successfully. In other forex news, GBP came under extensive pressure after manufacturing PMI data from the UK demonstrated a contraction, and reached its lowest level since Jun'09. Elsewhere, EUR/USD received support partly on the back of market talk of a US corporate name and an Asian name buying in the pair.
COMMODITIES
WTI and Brent Crude futures traded higher on the back of positive news that President Obama and Congressional leaders approved a deal to raise the debt ceiling allied with a weakening USD-Index.
Oil & Gas News:
• Syria will resume pumping crude oil through a pipeline that was damaged in a sabotage attack on the 29th July.
• Iraq’s July revenues rose 2% on oil price increases, however July oil exports fell 4.8% on month at 2.164 MBPD according to the SOMO Chief. Oil exports fell due to an increase in local consumption levels the SOMO Chief said.
• After recent reports that Iran may no longer provide oil to Indian Refiners, Saudi Arabia will sell crude to Indian Refiners in August according to people familiar with the situation. However in the latest news, Iran said a payment row over oil exports to India has now been resolved, according to the Oil Ministry’s website.
• India’s June oil imports rose 30%, Y/Y, at USD 10.2bln, according to the government.
Geopolitical News:
• Syrian soldiers stormed Hama leaving 121 dead according to activists, with President Assad’s forces looking to assert control on the city on the eve of Ramadan.
• A Japan Coast Guard patrol boat sighted a Chinese vessel Saturday morning near Japan's Senkaku Islands in the East China Sea, the coast guard said.
• UK’s Foreign Secretary William Hague said Britain wants stronger international pressure on Syria, including from Arab Nations over its crackdown on protesters, but rules out military intervention.
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It ain't a deal until it's a deal.
US 'borrowing' more trillions out of thin air, hooray theyve made a 'deal' and its time for the people to bend over again.
You mean this doesn't fix everything? I was going to scoop up a McMansion and reduce the housing inventory when Congress fixed the budget. /s
That's it, a lousy $10 drop in the futures price of gold? What happened to all the MSM pundits who said the gold bugs would get killed? Where's the summer plunge? I need more physical.
2 days at most of mild lite beer from a keg party, then the hangover kicks in we're right back where we were a week ago, mired in debt just trillions more of it now, all QE's *fail* and obviously in recession.
Heh heh....that's it man.....BTFD.
Pt and Pd are skying today.....you did get the memo didn't you?
dick armey is not a spokesman for anyone. he is part of the neocons who infiltrated and destroyed the tea party movement. he deserves a traitor's death......
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