This page has been archived and commenting is disabled.
Daily US Opening News And Market Re-Cap: May 30
From RanSquawk
- The EU is willing to envisage direct ESM bank recapitalizations, and says the Eurozone should move towards a banking union.
- The EU also noted that France must take additional steps or risk missing 2013 deficit target of 3% of GDP.
Market Re-Cap
Risk-averse sentiment dominated the session yet again as market participants continued to focus on Spain and speculated whether the country will soon be forced to seek some sort of monetary assistance. As a result, credit markets continued to deteriorate, with the EURUSD cross-currency basis-swaps under pressure, while the spread between Spanish and German benchmark bonds widened to a fresh Euro-era wide level. Less than impressive demand for the latest Italian debt issuance where 2017 was underbid by EUR 0.20, while the 2022 issue was underbid by EUR 0.30 also resulted in aggressive bond yield spread widening.
However, as we head into the North American open, reports that the EU is willing to envisage direct ESM bank recapitalizations saw Bunds spike lower by around 33ticks and EUR/USD by 44pips to the upside. EU stocks made an impressive recovery, but remain in negative territory. Going forward, the second half of the session will see the release of latest housing data (pending home sales), as well as the weekly API report.
Asian Headlines
China has significantly accelerated approvals for new investment projects by companies and local governments, part of the campaign to support growth in the economy, according to WSJ analysis. (WSJ)
The analysis shows in the first four months of this year, the NDRC approved more than twice as many investment projects as it did in the same period a year earlier.
China needs an appropriate amount of investment to spur economic growth but Beijing should not launch a new round of aggressive fiscal stimulus, according to influential academics. (People’s Daily)
An S&P executive has said China will opt for targeted stimulus, as opposed to major spending. (Newswires)
EU and UK Headlines
EU is willing to envisage direct ESM bank recapitalizations, Eurozone should move towards a banking union.
- France must take additional steps or risk missing 2013 deficit target of 3% of GDP
- Joint debt issuance would help Eurozone budget discipline, solidarity, once preconditions met
-Greece must better implement reforms to keep getting full bailout aid, risks remains very high (Newswires)
The EC will ask the EU finance ministers to grant an additional year to Spain to reach a deficit target of 3% of GDP, extending the deadline to 2014 from 2013, according to an EU draft document. (El Pais)
Spain said it will present its medium term plan to present central government spending with the next budget that is sent to parliament. (Newswires)
Curve continued to flatten, German 2/10s flatter 2.5bps, 2/30s by 4.5bps while the Irish bond yield curve inverted for the first time since January. On that note, Irish central banker said that Irish banks need further EUR 3-4bln over 5-6 years. Today’s Italian government bond auction saw the 2017 paper underbid by EUR 0.20, while the 2022 issue was underbid by EUR 0.30. Peripheral bond yield spreads continued to widen, SP/GE 10-y wider by c.30bps and IT/GE 10-y wider by c.27bps.
Italian BTP Auction Results
-Italy sells EUR 3.391bln 4.75% Jun'17 BTPs, bid/cover 1.352 (yield 5.66%) - Highest yield since December
-Italy sells EUR 2.341bln 5.50% Sept'22 BTPs, bid/cover 1.395, Prev. 1.48 (yield 6.03%, Prev. 5.840%) - Highest yield since January
BarCap Pan Euro Agg month end extension seen at +0.04yrs
BarCap US Treasury month end extension seen at +0.06yrs
iBoxx UK Agg month end extension seen at +0.06yrs
EQUITIES
Despite the bounce following reports that the EU is willing to envisage direct ESM bank recapitalizations, stocks in Europe are still trading lower across the board. Basic materials, oil & gas sectors are seen as the worst performers, as concerns regarding economic growth across the world weigh on the commodity complex. Banks are also under pressure amid tighter credit market conditions. On that note, GS’s chief economist warned that Greece exiting the Eurozone could lead to EU bank runs, reported by the German newspaper Die Welt. Separately, unconfirmed market-talk that the Spanish regulator will enact another short-selling ban failed to support domestic banks.
FX
EUR/USD erased touted barriers at the 1.2450 level earlier in the session and printed session low at 1.2425, intraday option expiry is seen at 1.2450 and 1.2475. USD/JPY trended lower throughout the session and large bids are touted ahead of the key 79.00 level. Of note, FX Concept’s Asia chief has said EUR/USD may fall to 1.1000 and EUR/JPY to 90.00 by the year-end. The chief also expects USD/JPY at 75.00 this summer, and 83.00 by the year end. (Nikkei/Newswires)
COMMODITIES
WTI and Brent crude futures are seen trading lower by over USD 1.00 apiece, moving in line with European stock futures and further weighed upon by USD strength across the board. Macroeconomic European concerns continue to dominate ahead of the NYMEX pit open, but energy participants can look forward to the API inventory data released after-market today.
Oil & Gas News:
- The State Oil Marketing Organisation for Iraq has said the country’s exports for May so far average 2.4MBPD, with exports from Southern oilfields at 2.13MBPD.
- Japan’s crude imports from Iran slumped by 66% in April amid continued pressure from the West to reduce buying the country’s exports.
- Royal Dutch Shell’s CEO said he expects natural gas prices in North America to recover slightly next year. The CEO added that his company can produce natural gas for less that USD 2.00 and is still lowering costs.
- Following an explosion on a pipeline carrying Azeri natural gas from the Shah Deniz fields, Turkish energy officials have warned that flows may not resume for ten days.
- 2571 reads
- Printer-friendly version
- Send to friend
- advertisements -


Early on an exponential curve looks like a linear curve but at some point it proves to be exponential. We are beginning to see the curve and people are beginning to see that there is no firewall large enough.
After the recent leg down we have had a rising wedge form on the SPY. Could this be the beginning of the breakdown leading into another leg down? I'll take that bet!