Daily US Opening News And Market Re-Cap: November 11

From RanSquawk:

• Trading volume remains thin as Veterans Day in the US and Armistice Day in Europe is being observed
• The new Greek government, led by ex-ECB vice president Papademos, is expected to be sworn in at 1400GMT today
• The Italian Senate approves budget measures. According to the PM’s office, Italy’s cabinet will meet on Saturday evening at around 1700GMT, after the lower house votes on a financial stability law
• Market talk that the ECB is buying the Italian and Spanish government debt
• Merkel's CDU party's general secretary said that the party is poised to back a motion at its annual party congress on November 13th-15th to offer states a "voluntary" means of leaving the Eurozone
• GBP/USD came under pressure following worse than expected PPI data from the UK

Market Re-Cap
 
Risk-appetite prevailed for a vast majority of the European session on growing prospects of stable government formation in Italy and Greece. The new Greek government, led by ex-ECB vice president Papademos, is expected to be sworn in at 1400GMT today, whereas in Italy Berlusconi is expected to clear the way for the next government formation after the Lower House of Parliament votes on the austerity measures on Saturday. The appetite for risk helped financials, with stark out-performance seen in the Italian FTSE MIB index. However, some negative sentiment entered the market after Merkel's CDU party's general secretary said that the party is poised to back a motion at its annual party congress on November 13th-15th to offer states a "voluntary" means of leaving the Eurozone. Strength in equities weighed on Bunds, whereas the Eurozone 10-year government bond yield spreads generally tightened, with particular tightening observed in the Italian/German and Spanish/German spreads partly helped by market talk of the ECB buying the Italian and Spanish government debt. In the forex market, weakness in the USD-Index, in early trade, supported EUR/USD, GBP/USD and commodity-linked currencies, however as the session progressed, the USD-Index came off its earlier lows. GBP/USD came under further pressure following worse than expected PPI data from the UK.
 
Moving into the North American open, the economic calendar remains thin, however, markets look ahead to the University of Michigan Confidence report from the US. It is also worth noting that owing to the Veterans Day holiday in the US, trading volume is likely to remain thin. Market participants will also keep a close eye on any developments related to the political situation in Greece and Italy.
 
Global Headlines:
 
The ECB and the BoJ borrowed dollars from the Fed in the latest week, the New York Fed reported, although the ECB's dollar borrowing far exceeded that of Japan's central bank. As of Wednesday, the ECB drew USD 505mln from the Fed's facility in a seven-day dollar swap at an interest rate of 1.08%. In an unusual move, the BoJ also conducted dollar operations in two separate moves: one 83-day swap for USD 100mln and a USD 2mln swap for six days. (WSJ)
 
In other news, diplomatic deadlock is curbing China's will to provide cash to help end the Eurozone crisis after Europe spurned the simplest of Beijing's three key demands, according to sources. China had offered help in return for European support to grant it either more influence at the IMF, market economy status in the WTO, or the lifting of a European arms embargo, said the sources. (RTRS)
 
US Headlines
 
Fed’s balance sheet liabilities were USD 2.822trl in the week to Nov 9 vs. USD 2.805trl from the previous week. Fed’s holding of treasuries totalled USD 1.668trl in the week to Nov 9 vs. USD 1.654trl from the previous week. Fed holdings of Agency debt and MBS were unchanged at USD 107.7bln and USD 849.3bln respectively. Foreign central banks’ overall holdings of US marketable securities at the Fed fell USD 474bln in the week ended Nov 9 to stand at USD 3.442tln (RTRS)
 
EU and UK Headlines
 
According to the PM’s office, Italy’s cabinet will meet on Saturday evening at around 1700GMT, after the lower house votes on a financial stability law. The Senate approved budget measures, which includes economic reform measures demanded by European partners, today. It will now move to the Lower House Chamber of Deputies on Saturday for final approval, after which Berlusconi has promised to step down. (RTRS)
 
In other news, this week’s market upheaval has made it difficult to increase the firepower of the Eurozone’s EUR 440bln rescue fund to the EUR 1tln that the bloc’s leaders has hoped for according to EFSF’s head Regling. (FT -More)
 
•       UK PPI Input NSA (Oct) M/M -0.8% vs. Exp. -0.3% (Prev. 1.7%, Rev. to 1.8%)
•       UK PPI Input NSA (Oct) Y/Y 14.1% vs. Exp. 14.5% (Prev. 17.5%, Rev. to 17.7%), lowest since Dec'10
•       UK PPI Output NSA (Oct) M/M 0.0% vs. Exp. 0.1% (Prev. 0.3%)
•       UK PPI Output NSA (Oct) Y/Y 5.7% vs. Exp. 5.9% (Prev. 6.3%)
•       UK PPI Output Core NSA (Oct) M/M -0.1% vs. Exp. 0.1% (Prev. 0.3%)
•       UK PPI Output Core NSA (Oct) Y/Y 3.4% vs. Exp. 3.6% (Prev. 3.8%) (RTRS)
 
EQUITIES
 
Risk-appetite prevailed for a vast majority of the European session on growing prospects of stable government formation in Italy and Greece. The appetite for risk helped financials, with stark out-performance seen in the Italian FTSE MIB index. However, some negative sentiment entered the market after Merkel's CDU party's general secretary said that the party is poised to back a motion at its annual party congress on November 13th-15th to offer states a "voluntary" means of leaving the Eurozone. Moving into the North American open, equities continue to trade higher, with industrials and utilities as the best performing sectors.
 
FX
 
Weakness in the USD-Index, in early trade, supported EUR/USD, GBP/USD and commodity-linked currencies, however as the session progressed, the USD-Index came off its earlier lows. GBP/USD came under further pressure following worse than expected PPI data from the UK.
 
COMMMODITIES
 
WTI and Brent crude futures traded in positive territory for a vast majority of the European session helped by growing prospects of stable government formation in Italy and Greece, allied with weakness in the USD-Index.
 
Oil & Gas News:

•       According to the Iranian oil ministry, Iran will ask those OPEC countries that raised output after Libya conflict to reduce output to previous levels. It further said that current oil prices are fair but, as producer country, would prefer better level. Also, Iran's oil minister said that sanctions will not increase oil prices.
 
Geopolitical News:

•       China and Iran have normal business ties which should not be targeted by any new sanctions on Iran over its nuclear programme, the Chinese foreign minister said repeating that in any case sanctions were not the solution.
•       Military action against Iran could have unintended consequences in the region, according to US Defence Secretary Leon Panetta.

Comments

[fredquimby]

Also, Iran's oil minister said that sanctions will not increase oil prices.

Surely if sanctions are imposed the world loses 5% of it's oil supply? Or is it sanctions apart from oil? Jeez if I was Pres of Iran, I would have stopped selling oil to the US and UK ages ago since they are such ungracious bastards. I bet the Chinks and Ruskies would buy it all in a snap too....

Perhaps this would be one of Leon's "unexpected" results of pissing off Iran...they will make it reciprocal and refuse to deal wiht UK and USA!!

[fredquimby]

hahahahaha

However, some negative sentiment entered the market after Merkel's CDU party's general secretary said that the party is poised to back a motion at its annual party congress on November 13th-15th to offer states a "voluntary" means of leaving the Eurozone.

Good luck with that Merky!

WTF right has a CDU conference got to try and alter the EU constitution??? Correct. No right. #fail