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Daily US Opening News And Market Re-Cap: July 26

Tyler Durden's picture




 

From RanSquawk

  • Market participants remained reluctant to invest in USD-based assets as the US lawmakers failed to reach a deal on raising the US debt ceiling, ahead of an August 2nd deadline, which resulted in the USD-Index to trade lower
  • GBP received strength across the board following the release of second quarter advanced GDP data from the UK, which came in-line with expectations; however UK's ONS said that the quarterly GDP would have been 0.7% without taking into account special factors
     
  • European equities came under pressure partly on the back of lacklustre European corporate earnings from the likes of BP, UBS and Deutsche Bank

Market Re-Cap
 
Market participants remained reluctant to invest in USD-based assets as the US lawmakers failed to reach a deal on raising the US debt ceiling, ahead of an August 2nd deadline, which resulted in the USD-Index to trade lower. European equities opened higher, led by financials, however as the session progressed prices moved back in negative territory, weighed upon by lacklustre European corporate earnings from the likes of BP (-2.36%), UBS (-2.37%), and Deutsche Bank (-0.68%). However, the FTSE 100 Index received support after GlaxoSmithKline said that its operating margin will begin to improve in 2012. Elsewhere, GBP received strength across the board following the release of second quarter advanced GDP data from the UK, which came in-line with expectations; however UK's ONS said that the quarterly GDP would have been 0.7% without taking into account special factors. Also, JPY weakness was observed following comments from sources that Japan's policy-makers are considering solo FX intervention as an increasingly viable near term option.
 
Moving into the North American open, markets look ahead to economic data from the US in the form of consumer confidence, Richmond Fed manufacturing report, as well as new home sales figures. In fixed income, USD 35bln 2-year Note auction, together with another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Aug'18-May'21, with a purchase target of USD 2.75-3.5bln are also scheduled for later in the session. Markets will also keep a close eye on US corporate earnings from the likes of Amazon.com and Gilead Sciences.
 
Asia Headlines:
 
Japanese Prime Minister, Kan, denied speculation that he might call an early election for parliament’s powerful lower house. (Jiji)
 
In other news, Chinese vice commerce minister, Gao Hucheng, said the outlook for China’s exports is uncertain for the rest of the year, and the government needs to keep policies flexible to maintain stable export growth. Meanwhile, according to a researcher at the State Council’s Development Research Centre, Ba Shusong, China should wait for the effects of macroeconomic policies after inflation falls from its peak to prevent over-adjustment. (RTRS/Financial News)
 
US Headlines
 
President Obama said failure to act on deficits and debt could cost jobs and do serious damage to the economy, adding that a default would see credit rating downgraded, interest rates would skyrocket, which would be a huge tax on Americans. He also said a significant number of Congressional Republicans are opposed to a balanced approach to cutting US deficit. He called on divided Congressional leaders to compromise and break a deadlock over raising the US debt limit. (RTRS)
 
In other news, according to analysts at UBS and Barclays, the US Treasury may have enough cash to pay the government’s bills for days or even weeks if Congress fails to raise the debt limit before an August 2nd deadline. (Sources)
 
Elsewhere, the CME Group has raised collateral haircuts on US Treasuries effective from Thursday. It last changed collateral haircuts on US Treasuries in December 2007. Meanwhile, Singapore wealth fund GIC said US government bonds remain a safe investment despite fears of a looming debt default, but noted longer-term concerns about fiscal strains in the US and Europe were prompting it to shift more money into emerging markets. (RTRS)
 
BarCap month-end extensions: US Treasury +0.07years
 
EU and UK Headlines:
 
Early in the European session, according to Reuters, ECB's Noyer said that the ECB is in a state of “strong vigilance”. However, later in the session Bank of France clarified that ECB's Noyer said the ECB is in a mode of "strong alertness", and didn’t use the phrase “strong vigilance”.
 
•    UK GDP (Q2 A) Q/Q 0.2% vs. Exp. 0.2% (Prev. 0.5%)
•    UK GDP (Q2 A) Y/Y 0.7% vs. Exp. 0.8% (Prev. 1.6%) (RTRS)
•    Spanish 3-month T-Bill auction for EUR 0.75bln, bid/cover 6.3 vs. Prev. 9.49 (yield 1.899% vs. Prev. 1.568%)
•    Spanish 6-month T-Bill auction for EUR 2.14bln, bid/cover 2.2 vs. Prev. 3.84 (yield 2.519% vs. Prev. 1.776%)
•    Italian 6-month BOT auction for EUR 7.5bln, bid/cover 1.561 vs. Prev. 1.72 (yield 2.269% vs. Prev. 1.988%) (RTRS)
 
BarCap month-end extensions: Euro +0.14years
BarCap month-end extensions: Sterling +0.02years
 
EQUITIES
 
European equities opened higher, led by financials, however as the session progressed prices moved back in negative territory, weighed upon by lacklustre European corporate earnings from the likes of BP (-2.36%), UBS (-2.37%), and Deutsche Bank (-0.68%). However, the FTSE 100 Index received support after GlaxoSmithKline said that its operating margin will begin to improve in 2012. Moving into the North American open, European equities are trading mixed, with telecommunications and basic materials as the best performing sectors.
 
FX
 
Market participants remained reluctant to invest in USD-based assets as the US lawmakers failed to reach a deal on raising the US debt ceiling, ahead of an August 2nd deadline, which resulted in the USD-Index to trade lower. Elsewhere, GBP received strength across the board following the release of second quarter advanced GDP data from the UK, which came in-line with expectations; however UK's ONS said that the quarterly GDP would have been 0.7% without taking into account special factors. Also, JPY weakness was observed following comments from sources that Japan's policy-makers are considering solo FX intervention as an increasingly viable near term option.

COMMODITIES
 
WTI and Brent crude futures traded higher as the USD-Index weakened on the back of a failure by the US lawmakers to reach a deal on raising the US debt ceiling so far ahead of an August 2nd deadline.
 
Oil & Gas News:

•    According to Iran’s OPEC governor, crude prices are expected to increase, and Saudi Arabia’s oil production increase cannot prevent price hike. He further said that the oil market is balanced.
•    According to Venezuelan President, Chavez, OPEC’s recognition that his country has the largest oil reserves in the world will result in a larger production quota in OPEC.
•    Saudi Arabia approved sale of an extra 3mln barrels of crude to Indian refiners for August after Iran cuts supply, according to sources.
•    Barclays raised its Q3 UK natural gas forecast to GBP 0.52 per therm from GBP 0.50 per therm.
 
Geopolitical News:

•    According to the South Korean President, his country will continue to seek “principled dialogue” with North Korea to break the deadlock in their relations.

Daily Us Opening News

 

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Tue, 07/26/2011 - 08:36 | 1493928 Mercury
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