Daily US Opening News And Market Re-Cap: August 17
- European equities came under pressure after French president Sarkozy and German chancellor Merkel said yesterday that a financial transaction tax will be proposed in September
- BoE’s minutes showed that the MPC members voted 9-0 for no interest-rate hike, which together with weaker than expected jobs data from the UK weighed on GBP
- CHF received a boost across the board after the SNB didn’t mention EUR/CHF peg in its latest communiqué
The meeting between German chancellor Merkel and French president Sarkozy yesterday yielded neither an approval for Eurobonds issuance, nor any immediate extension to the EFSF; instead the two leaders did say that a financial transaction tax will be proposed in September. The news promoted risk-aversion during the European session and weighed on equities, with particular underperformance seen in financials, whereas Bunds received support and marginal widening was observed in the Eurozone 10-year government bond yield spreads across the board. Elsewhere, weakness in the USD-Index supported EUR/USD, GBP/USD and commodity-linked currencies. However, GBP came under pressure following the release of BoE’s minutes, which showed that the MPC members voted 9-0 for no interest-rate hike, together with worse than expected jobs data from the UK. In other forex news, CHF received a boost across the board after the SNB didn’t mention EUR/CHF peg in its latest communiqué.
Moving into the North American open, the economic calendar remains thin, however markets look ahead to the PPI and DOE inventories reports from the US later.
PBOC’s adviser, Li Daokui, said China will basically maintain its existing monetary policy direction, and is unlikely to introduce new stimulus measures. (China Business News)
In other news, China’s top bank regulator said Beijing’s clean-up of local Chinese government debt is progressing smoothly and that risks from more than USD 1trl in loans are under control. It further said that future CPI trend is still uncertain, and China still faces imported inflation pressure. (People’s Daily)
Fed’s Bullard said the Fed isn’t signalling a third round of quantitative easing with its commitment to keep rates near zero through mid-2013. He said that the most likely outcome for the US economy is still that growth will continue at a moderate pace in the second half of 2011. (Sources)
In other news, President Obama is considering recommending that the Congressional Committee back new measures to stimulate the economy, according to people familiar with the matter. (WSJ)
Note: At 4:16 pm New York time yesterday NYSE LIFFE US printed 1,500 Sept 2011 10-yr Treasury Note Futures at 130-01. (NYSE LIFFE US)
EU and UK Headlines:
• Eurozone CPI (Jul) Y/Y 2.5% vs. Exp. 2.5% (Prev. 2.5%)
• Eurozone CPI Core (Jul) M/M 1.2% vs. Exp. 1.6% (Prev. 1.6%)
• UK Claimant Count Rate (Jul) M/M 4.9% vs. Exp. 4.7% (Prev. 4.7%, Rev. to 4.8%)
• UK Jobless Claims Change (Jul) M/M 37.1K vs. Exp. 20.0K (Prev. 24.5K, Rev. to 31.3K)
• UK ILO Unemployment Rate (Jun) 3M/Y 7.9% vs. Exp. 7.7% (Prev. 7.7%) (RTRS)
• German Schatz auction for EUR 5.615bln, 0.75% 13-Sep-13, bid/cover 1.4 (yield 0.73%, retention 19.8%)
• Portuguese 3-month T-Bill auction for EUR 0.985bln, bid/cover 1.8 vs. Prev. 2.60 (yield 4.854% vs. Prev. 4.967%)
• Portuguese 6-month T-Bill auction for EUR 0.172bln, bid/cover 7.2 vs. Prev. 3.70 (yield 4.989% vs. Prev. 4.960%) (RTRS)
European equities traded lower during the session after French president Sarkozy and German chancellor Merkel said yesterday that a financial transaction tax will be proposed in September. Financials remained under pressure on the back of this news, with particular underperformance seen in French and Italian banks. Elsewhere, in its quarterly earnings release, Dell slashed its revenue forecast for 2011, which weighed on the technology sector. However, weakness in the USD-Index supported oil & gas and basic materials sectors. Moving into the North American open, European equities are trading mixed with financials and technology as the worst performing sectors.
Weakness in the USD-Index supported EUR/USD, GBP/USD and commodity-linked currencies. However, GBP came under pressure following the release of BoE’s minutes, which showed that the MPC members voted 9-0 for no interest-rate hike, together with worse than expected jobs data from the UK. In other forex news, CHF received a boost across the board after the SNB didn’t mention EUR/CHF peg in its latest communiqué.
WTI and Brent crude futures traded higher in early European trade after API Gasoline Inventories data indicated shrinking stockpiles allied with weakness in the USD-Index.
Oil & Gas News:
• Iranian Foreign Minister Salehi said Iran sees no ground for increasing output quotas by OPEC, adding that there is sufficient supply of oil in the market.
• China’s top energy official said solid planning to develop the country’s potentially vast shale gas resources in the next five years would help it get a head start in tapping the unconventional resource in the latter half of this decade.
• Russia was set to press ahead today with its drive to revive the stalled nuclear talks between Iran and Western Powers, after the Iranian president said he backed Moscow’s new crisis proposals.
• Rebels fighting to topple Libyan leader Gaddafi scorned reports of secret talks with him. In related news, Libya’s rebels were bolstered by fresh battlefield advances today, as leaders claimed the six-month-old civil war had entered a decisive phase and could end within weeks.
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