Daily US Opening News And Market Re-Cap: November 18

From RanSquawk

• According to sources, ECB’s lending to IMF proposal is gaining traction, adding that talks on ECB lending to the IMF may start soon
• Market talk of the ECB buying Italian and Spanish government debt
• Fed’s Dudley said the Fed has done a lot to ease monetary policy and could do more
• According to BoE’s Weale, there is a “very strong case” for extending the BoE’s money-printing operations next year unless the outlook improves

Market Re-Cap
 
The Nikkei (-1.23%) closed lower, weighed upon by ongoing debt and political turmoil in the Eurozone, which also weighed upon European equities for a vast majority of the session. However, as the European session progressed, equities came off their earlier lows as risk-appetite picked up with market talk of the ECB back in the market buying Eurozone government debt, together with signs of progress on the Greek debt swap situation. Peripheral European indices, including the Italian FTSE MIB and Spanish IBEX 35, moved higher, whereas financials also received some support. Comments from sources that ECB’s lending to the IMF proposal is gaining traction and talks may start soon rendered further support to equities. In fixed income, the comments weighed on Bund futures resulting in stops getting triggered below the 137.00 level to the downside, which saw around 15,000 Bund contracts traded within a 1 minute period. This move also coincided with the T-Note future printing session lows, helped by market talk of Asian names selling in the 10-year part of the curve.
 
The USD-Index remained in negative territory partly weighed upon by comments from Fed's Dudley overnight that the Fed could do more monetary easing if required, which in turn supported EUR/USD, GBP/USD and commodity-linked currencies. EUR/USD received further boost following comments from sources that ECB’s lending to IMF proposal is gaining traction and talks on ECB lending to the IMF may start soon. Elsewhere, CAD gained strength after higher than expected CPI data from Canada. Moving into the North American open, the economic calendar remains thin, however markets look ahead to the US leading indicators. In fixed income, another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Feb'36-Nov'41, with a purchase target of USD 2.25-2.75bln is also scheduled for later. Markets will also keep a close eye on comments relevant to the Eurozone debt situation.
 
Asian Headlines:
 
China’s average home prices in October ticked lower for the first time this year official data showed. Average house price inflation in China’s 70 major cities dropped to 2.8% last month for a year earlier, down from Septembers 3.5%. (RTRS)
 
US Headlines
 
Fed’s Dudley says Fed has done a lot to ease monetary policy and could do more. He added that Fed could say what levels of unemployment and inflation might trigger a change in policy. The Fed could also do more on the balance sheet side to buy MBS to help the housing sector and Fed will continue to evaluate further bond buys he said. (RTRS)
 
In other news, US Fed balance sheet liabilities were USD 2.814trl in the week to Nov 16 vs. USD 2.843trl in the week to Nov 9, Fed holdings of Treasuries totalled USD 1.676trl in the week to Nov 16 vs. USD 1.668trl in the week to Nov 9. Fed holdings of agency debt totalled USD 107.5bln, down from USD 107.7bln and holdings of MBS were USD 841.98bln, down from USD 849.3bln. (RTRS)
 
Elsewhere, US House of Representatives passed a bill that would fund the US Government through to Dec. 16, and has been sent to Senate. The bill also raises the limit on the size of mortgages the FHA can issue. US deficit reduction panel member Toomey says he sees efforts in congress to alter automatic spending cuts if negotiations fail. (RTRS)
 
EU and UK Headlines
 
According to sources, ECB’s lending to IMF proposal is gaining traction, adding that talks on ECB lending to the IMF may start soon. The source further said that if consensus forms, deal may be reached at December 9th EU summit, and while Germany and ECB are opposed to the idea, they may be willing to consider. (RTRS)
 
EQUITIES
 
The Nikkei (-1.23%) closed lower, weighed upon by ongoing debt and political turmoil in the Eurozone, which also weighed upon European equities for a vast majority of the session. However, as the European session progressed, equities came off their earlier lows as risk-appetite picked up with market talk of the ECB back in the market buying Eurozone government debt, together with signs of progress on the Greek debt swap situation. Peripheral European indices, including the Italian FTSE MIB and Spanish IBEX 35, moved higher, whereas financials also received some support. Comments from sources that ECB’s lending to IMF proposal is gaining traction and talks may start soon rendered further support to equities. Moving into the North American open, equities are trading mixed, with basic materials and technology as the best performing sectors.
 
In other news, S&P plans to update its credit ratings for the world’s 30 biggest banks within three weeks and may well mete out a few downgrades in the process. Among the institutions that could be downgraded are Bank of America, Citigroup and Morgan Stanley an analyst said adding that some European banks could also be affected. 80% of ratings are likely to hold or rise. (RTRS)

FX
 
The USD-Index remained in negative territory partly weighed upon by comments from Fed's Dudley overnight that the Fed could do more monetary easing if required, which in turn supported EUR/USD, GBP/USD and commodity-linked currencies. EUR/USD received further boost following comments from sources that ECB’s lending to IMF proposal is gaining traction and talks on ECB lending to the IMF may start soon. Elsewhere, CAD gained strength after higher than expected CPI data from Canada.
 
•       Canadian CPI (Oct) M/M 0.2% vs. Exp. 0.1% (Prev. 0.2%)
•       Canadian CPI (Oct) Y/Y 2.9% vs. Exp. 2.8% (Prev. 3.2%)
•       Bank of Canada CPI Core (Oct) M/M 0.3% vs. Exp. 0.1% (Prev. 0.5%)
•       Bank of Canada CPI Core (Oct) Y/Y 2.1% vs. Exp. 1.9% (Prev. 2.2%) (RTRS)

COMMMODITIES
 
WTI and Brent crude futures traded higher in the European session as risk appetite gathered pace allied with weakness in the USD-Index.
 
Oil & Gas News:

•       A possible global economic slowdown driven by Europe’s sovereign debt crisis will not dent demand for oil because demand will grow due to demographic growth and economies in Asia according to the head of Saudi Aramco.
•       National Australian Bank raised their WTI forecasts to USD 94 from USD 86 per barrel for Q4 of this year. Analysts also increased their forecasts for Brent oil for the period to USD 111 from USD 109 according to latest reports.
 
Geopolitical News:

•       US defence secretary warned that a strike on Iran could harm the world economy, saying the US focus was on diplomatic pressure and sanctions.

Comments

[Eally Ucked]

They think China and Brasil are stupid. They don't want to buy bonds directly so they will pay for loan to IMF, I don't think it will work.

[michaelsmith_9]

The USD continues higher with a bullish outlook.  The overnight ES rebound may have set the stage for further declines in equities today.  Here is a look at the ES, DX, and EURUSD.    http://bit.ly/vPInuR

[Zedge Hero]

This weeks episode on the Italian, Greek, and Irish protest the last few days since the American presstitutes are engulfed in still trying to figure out what the Wall street movement really means?  

http://www.youtube.com/user/zedgehero?feature=mhee

[Jalarupa]

Kudo's to Ransquawk for all the info as well as the TF line... Its really great that you people share this valuable info so freely.

Peace

[mbtshoe]

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Alexander Wang Bag | Alexander Wang Shoes | Alexander Wang Rocco Alexander Wang Frankie Creeper Short crude oil. The world is swiming in oil as everything else. Its elevated price is just a scam. The probability of war is zero. Uncle Sam can´t go to war against Iran because both its flanks are insecure. The left flank goes to the Straits of Hormuz and if that is closed this means crude price $300 and Stalingrad for US forces in Iraq and other US vassal states in the gulf. As for the right flank that supply line goes through Pakistan. It´s shaky enough as it is.