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Daily US Opening News And Market Re-Cap: November 17

Tyler Durden's picture




 

From RanSquawk

  • Focus remains on the debt and political turmoil surrounding Spain and Italy, with particular widening observed in the Spanish/German 10-year government bond yield spread. There was market talk of the ECB buying the Spanish and Italian government debt
  • Spain had a lackluster bond auction, with the auction yield printing an Euro-era high
  • Fitch said that the Euro-zone contagion poses a threat to the US bank rating outlook. Eurodollar and Euribor futures have remained under pressure throughout the European session
  • Italian PM Monti said will fully implement the previous government's letter of intent to the EU, and will consider necessity of additional measures
  • GBP/USD gained around 30 pips following higher than expected retail sales data from the UK

Market Re-Cap
 
Ongoing debt and political concerns surrounding Eurozone countries, with emphasis on Italy and Spain, once again weighed on European equities, which resulted in underperformance in financials, with the Italian FTSE MIB index lagging its European peers. Financials came under further pressure on the back of comments from Fitch that the Eurozone contagion poses a threat to the US bank rating outlook. Also, market participants remained nervous ahead of approximately EUR 11bln worth of combined supply from Spain and France, and equities came under further pressure following a lacklustre bond auction from Spain. In fixed income, the Eurozone 10-year government bond yield spread widened across the board, with particular widening seen in the Spanish/German, Italian/German and French/German spreads, which prompted market talk of the ECB buying the Spanish and Italian debt. Persistent concerns pertaining to Eurozone banks' funding also exerted pressure on Eurodollar and Euribor futures. Weakness in the USD-Index, during the early European session, provided support to EUR/USD and GBP/USD, however gains in EUR/USD were capped due to the Eurozone debt concerns, allied with a softer Spanish bond auction. As the European session progressed, the USD-Index pared earlier losses to trade near unchanged, amid risk-averse trade. Also, GBP/USD gained around 30pips after higher than expected retail sales data from the UK.
 
Moving into the North American open, markets look ahead to key economic data from the US in the form of jobless claims, housing starts, building permits and Philadelphia Fed report. In fixed income, USD 11bln 10-year TIPS auction, 2-, 5- and 7-year Note refunding announcement, together with another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Feb'20-Nov'21, with a purchase target of USD 4.25-5bln are also scheduled for later.
 
Asian Headlines:
 
Japanese exports and output growth will likely be flat for the time being before resuming a moderate increase according to the BoJ. They also added that however the outlook for exports is highly uncertain. (RTRS)
 
US Headlines
 
Fitch said that the Euro-zone contagion poses a threat to the US bank rating outlook. Fitch added, US banks have manageable direct exposures to the stress of European markets, but further contagion poses a serious risk. Fitch also believes that unless the Eurozone debt crisis is resolved in a timely and orderly manner, the broad credit outlook for the US banking industry could worsen. (Sources)
 
In other news, Fed's Bullard said US banks do not have great exposure to Europe, but there are some unknowns. Bullard further said that pushing harder with US monetary policy might lead to inflation, adding that the Fed would only ease if the economy deteriorates. Bullard also said that he does not want to tie policy to the unemployment rate. (RTRS)
 
EU and UK Headlines
 
The Eurozone’s six triple A rated countries should have greater say in economic affairs within the single currency and act as its inner “core”, Finland’s Europe minister will on Thursday argue, the latest sign that a small subset of countries are attempting to band together to set new rules for the euro. (FT - More)
 
•       UK Retail Sales (Oct) M/M 0.6% vs. Exp. -0.2% (Prev. 0.6%, Rev. to 0.5%)
•       UK Retail Sales (Oct) Y/Y 0.9% vs. Exp. -0.1% (Prev. 0.6%, Rev. to 0.5%)
•       UK Nationwide Consumer Confidence (Oct) M/M 36  vs.  Exp. 43 (Prev. 45) (RTRS)
 
•       Spanish bond auction for EUR 3.56bln, 5.85% 31-Jan-22, bid/cover 1.54 (yield 6.975%)
•       French BTAN auction for EUR 0.950bln, 2.00% Sep'13, bid/cover 3.872 vs. Prev. 2.05 (yield 1.85% vs. Prev. 1.310%)
•       French BTAN auction for EUR 1.069bln, 2.00% Jul'15, bid/cover 2.403 vs. Prev. 1.97 (yield 2.44% vs. Prev. 1.960%)
•       French BTAN auction for EUR 1.625bln, 2.25% Feb'16, bid/cover 2.031 vs. Prev. 2.03 (yield 2.71% vs. Prev. 2.940%)
•       French BTAN auction for EUR 3.332bln, 2.50% Jul'16, bid/cover 1.678 vs. Prev. 3.63 (yield 2.82% vs. Prev. 2.310%)
•       UK Conventional Gilt auction for GBP 4bln, 5.0% 2018 Gilt, bid/cover 1.92 vs. Prev. 1.99 (RTRS)
 
EQUITIES
 
Ongoing debt and political concerns surrounding Eurozone countries, with emphasis on Italy and Spain, once again weighed on European equities, which resulted in underperformance in financials, with the Italian FTSE MIB index lagging its European peers. Financials came under further pressure on the back of comments from Fitch that the Eurozone contagion poses a threat to the US bank rating outlook. Also, market participants remained nervous ahead of approximately EUR 11bln worth of combined supply from Spain and France, and equities came under further pressure following a lacklustre bond auction from Spain.
 
In other news, according to WSJ, European banks, increasingly concerned about their ability to access funding, are devising complex and potentially risky new deals that enable them to continue borrowing from the ECB. (WSJ)

FX
 
Weakness in the USD-Index, during the early European session, provided support to EUR/USD and GBP/USD, however gains in EUR/USD were capped due to the Eurozone debt concerns, allied with a softer Spanish bond auction. As the European session progressed, the USD-Index pared earlier losses to trade near unchanged, amid risk-averse trade. Also, GBP/USD gained around 30pips after higher than expected retail sales data from the UK.
 
China’s economy is moving up the value chain and its currency could mount a challenge to the USD in five to ten years, according to the US-China Economic and Security Review Commission. The commission also urged comprehensive review of US-China ties. (RTRS)

COMMMODITIES
 
WTI and Brent crude futures lacked any firm direction following continued concerns surrounding the Eurozone debt crisis, however losses were capped due to weakness in the USD-Index.
 
Oil & Gas News:

•       In a latest Goldman Sachs report, co. analysts said that Brent crude premium to New York oil is likely to narrow faster than previously forecasted as a planned reversal of the Seaway pipeline reduces supplies at the delivery point for US futures. Goldman’s forecasted Brent will trade at a premium of USD 6.50 a barrel to WTI in 6 months compared to a previous forecast of 12 months. On a similar note, with Brent premium to NYMEX crude reaching an 8 month low of USD 7.88 per barrel, analysts at Commerzbank said the spread will drop to zero by 2013 at the latest.
 
Geopolitical News:

•       World powers look set to overcome their differences and agree on a UN atomic agency resolution aimed at putting diplomatic pressure on Iran to address mounting fears about its nuclear programme, Western Diplomats said. The IAEA chief said they wrote to Iran to propose sending an IAEA mission soon to discuss nuclear concerns. On the related issue, the UN nuclear watchdog chief said they are increasingly concerned about possible military dimensions to Iran's nuclear work.

 

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Thu, 11/17/2011 - 09:10 | 1886295 The Axe
The Axe's picture

How can Bullard...say such bullshit with a straight face...what crap..

Thu, 11/17/2011 - 09:11 | 1886298 Temporalist
Temporalist's picture
U.S. New Home Starts Likely Slowed in October

 

"Starts fell 7.3 percent to a 610,000 annual rate in October, according to the median estimate of 82 economists surveyed by Bloomberg News. Manufacturing in the Philadelphia area expanded for a second month, other data may show."

 

http://www.bloomberg.com/news/2011-11-17/u-s-builders-probably-started-w...

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