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Daily US Opening News And Market Re-Cap: November 16

Tyler Durden's picture





 

From RanSquawk

  • Market talk that the ECB is buying Eurozone government bonds, while some traders suggested that the ECB bought over EUR 2bln worth of government debt
  • Bunds came under pressure following a technically uncovered Schatz auction from Germany
  • UniCredit shares came under pressure after news emerged that co.'s CEO is meeting with the ECB, to ask for more access to ECB funding for Italian banks by widening type of collateral used
  • GBP came under selling pressure following higher than expected ILO unemployment rate from the UK, and after the BoE slashed its growth and inflation forecasts for the UK
  • German Chancellor said that she believes treaty changes are needed to win back market confidence, and Germany therefore is willing to give up some national sovereignty

Market Re-Cap
 
European equities traded mixed during the session weighed upon by concerns surrounding the ongoing political and debt situation in many Eurozone countries, together with uncertainty about the effectiveness of tackling debt challenges by the new Italian and Greek governments. In equity specific news, UniCredit shares came under pressure after news emerged that co.'s CEO is meeting with the ECB, to ask for more access to ECB funding for Italian banks by widening type of collateral used. Weakness in equities provided support to Bunds, however prices did come under pressure following a technically uncovered Schatz auction from Germany. However, the Eurozone 10-year government bond yield spreads tightened in early trade, led by the Italian/German spread, on the back of market talk of the ECB buying the Italian government debt, while some traders suggested that the ECB bought over EUR 2bln worth of government debt. In the forex market, GBP came under selling pressure following higher than expected ILO unemployment rate from the UK, and extended losses after the BoE slashed its growth and inflation outlook in its quarterly inflation report. Also, the USD-Index regained strength as the session progressed, which weighed upon EUR/USD, GBP/USD and commodity-linked currencies.
 
Moving into the North American open, markets look ahead to a slew of key economic data from the US in the form of CPI, industrial production, capacity utilisation, and the DOE oil inventories report. In fixed income, Fed's Outright Treasury Coupon sales operation in the maturity range of Nov'13-Feb'14, with a purchase target of USD 8-8.75bln, allied with another BoE's Gilt purchase operation in the maturity range of 2022-2036 are also scheduled for later.
 
Asian Headlines:
 
BoJ maintained its key interest rate at a range of 0% to 0.1% by a unanimous vote.  BoJ announced no new monetary easing steps and also cut economic assessments. BoJ added that they must continue to carefully watch how global economic and market uncertainty could affect the Japanese economy. BoJ mentioned that changes in CPI is likely to remain about 0% for time being. (RTRS/Sources)
 
US Headlines
 
The New York Fed said it will be increasing the collateral requirements on 21 primary-dealer banks in transactions dealing with mortgage-backed securities, in an effort to lower the settlement risks with its counterparties. The spokesman gave no further information but the WSJ said the changes would begin on Monday. Separately the WSJ said the Fed may impose a 2.5% initial margin on the USD amount of the mortgage-backed securities transactions from the dealers. (RTRS/WSJ)
 
In other news, US Treasury Secretary Geithner said housing continues to drag on the US economy and urged congress to take steps to boost short term growth. (Sources)
 
•       US MBA Mortgage Applications (Nov 11) -10.0% vs. Prev. 10.3% (RTRS)
 
EU and UK Headlines
 
•       Eurozone CPI (Oct) Y/Y 3.0% vs. Exp. 3.0% (Prev. 3.0%)
•       UK ILO Unemployment Rate (Sep) 3M/Y 8.3% vs. Exp. 8.2% (Prev. 8.1%), rate highest since 1996
•       UK Jobless Claims Change (Oct) M/M 5.3K vs. Exp. 21.0K (Prev. 17.5K, Rev. to 13.4K)
•       UK Claimant Count Rate (Oct) M/M 5.0% vs. Exp. 5.1% (Prev. 5.0%) (RTRS)
 
•       German Schatz auction for EUR 4.815bln, 0.25% Dec'13, bid/cover 1.10 (yield 0.39%; retention 19.7%), technically uncovered
•       Portuguese 3-month T-Bill auction for EUR 0.773bln, bid/cover 2.4 vs. Prev. 2.0 (yield 4.895% vs. Prev. 4.997%)
•       Portuguese 6-month T-Bill auction for EUR 0.350bln, bid/cover 4.1 vs. Prev. 3.7 (yield 5.250% vs. Prev. 5.250%) (RTRS)
 
EQUITIES
 
European equities traded mixed during the session weighed upon by concerns surrounding the ongoing political and debt situation in many Eurozone countries, together with uncertainty about the effectiveness of tackling debt challenges by the new Italian and Greek governments. In equity specific news, UniCredit shares came under pressure after news emerged that co.'s CEO is meeting with the ECB, to ask for more access to ECB funding for Italian banks by widening type of collateral used. Elsewhere, oil & gas and basic materials sectors came under pressure as the USD-Index strengthened. However, equities did receive support after German Chancellor Merkel said that she believes EU treaty changes are needed to win back market confidence, and Germany therefore is willing to give up some national sovereignty. Moving into the North American open, equities continue to trade mixed, with telecommunications and basic materials as the worst performing sectors.

FX
 
GBP came under selling pressure following higher than expected ILO unemployment rate from the UK, and extended losses after the BoE slashed its growth and inflation outlook in its quarterly inflation report. Also, the USD-Index regained strength as the session progressed, which weighed upon EUR/USD, GBP/USD and commodity-linked currencies.

COMMMODITIES
 
Moving into the NYMEX pit open, WTI crude futures came under some selling pressure as the USD-Index strengthened and ahead of the DOE oil inventories report.
 
Oil & Gas News:

•       IEA’s head said the balance between supply and demand in oil markets is getting tighter and hoped that OPEC will come to a unanimous decision on output in December. The IEA’s head added that high oil prices could endanger economic recovery in Europe and says it is up to OPEC to decide whether to raise oil output in December.
 
Geopolitical News:

•       Iran’s armed forces chief said last week's deadly blast at revolutionary guard’s base happened during a military research and denied any sabotage by Israel. In other news, according to Iran’s Salehi, the country will send an analytical response to IAEA’s report.
 
Other News:
 
•       ANZ said it expects the continued focus on Europe’s debt problems to cause gold prices to end the year at USD 1,850 an ounce and possibly rally above USD 2,000 an ounce in 2012. (RTRS)

 


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Wed, 11/16/2011 - 09:13 | Link to Comment michaelsmith_9
michaelsmith_9's picture

The USD is something to pay attention to today.  It will be confirmed with a break below the triangle formation on the SPX.  Here is a look at the SPX, DX, and EURUSD.    http://bit.ly/rPmozF

Wed, 11/16/2011 - 09:28 | Link to Comment jdelano
jdelano's picture

Goldman sold 5 trillion of CDS protection on sovereigns.  This may be the greatest scam in the history of the world.

 

Step 1:  Buy up soverign bonds you know are going to default and sell trillions in CDS on them at inflated prices

Step 2:  Meet with your ISDA friends and decide that CDS will never trigger, thereby ensuring you will pocket the premium

Step 3:  Let the pressure on soverign bonds build until you have leverage to topple every government in Europe that isn't already Goldman owned.  Replace them all with former Goldman employees and cronies.  Take over the ECB printer and make yourself whole on the sovereign bonds.  

 

I don't want to overstate it, but these guys really are evil.  It's like watching Palpatine and Vader at work.   

Wed, 11/16/2011 - 09:18 | Link to Comment DormRoom
DormRoom's picture

ECB sterilization criticality very soon.  no bathroom break for the next month, less you come back wiped out.

Wed, 11/16/2011 - 09:20 | Link to Comment CreativeDestructor
CreativeDestructor's picture

Given important Spanish and French auctions tomorrow ECB (who can't be seen in the primary) seems to have tried to free up some cash for banks so they can sell Italian trash today and buy SpanoFrench trash tomorrow. Very creative and of course dumb.

Wed, 11/16/2011 - 09:22 | Link to Comment Enkidu78
Enkidu78's picture

Now I know what it must have been like during WWI and WWII here in the UK.  Germany edging closer and closer to our borders with the threat of occupation increasing week by week. 

We need to role out the spitfire again and our bouncing bombs because thats all we can afford these days and fight them off!!

Wed, 11/16/2011 - 09:22 | Link to Comment Azannoth
Azannoth's picture

"..Germany therefore is willing to give up some national sovereignty" - Merkl later added "I Am Germany"

Wed, 11/16/2011 - 10:55 | Link to Comment Gringo Viejo
Gringo Viejo's picture

Buying paper with paper...makes perfect sense.

Wed, 11/16/2011 - 11:35 | Link to Comment i-dog
i-dog's picture

 

  "Germany therefore is willing to give up some national sovereignty"

Fuck you, Angela!! You should be taking back all of your countrymen's sovereignty from the priests in Rome and Brussels!

Wed, 11/16/2011 - 11:35 | Link to Comment Piranhanoia
Piranhanoia's picture

As we await yet another dozen (cubed) rumors of bailout, the paranoia in Keynesland,  the most important words to me what the Schatz Auction.

Is this merely the past tense of Scheise?

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