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Daily US Opening News And Market Re-Cap: October 24

Tyler Durden's picture




 

From RanSquawk

  • In their weekend summit, the Eurozone officials said they planned to use the EFSF to provide partial guarantees to buyers of new Italian and Spanish bonds, while also creating a special purpose vehicle to attract funds from major emerging countries
  • Market participants remained worried on the issue of losses incurred by private sector investors on their Greek debt holdings
  • There was market talk that this Wednesday’s EU leaders’ summit could be delayed, however it was promptly denied by Eurozone officials
  • Higher than expected HSBC Manufacturing PMI data from China boosted risk-appetite in early European trade; however lackluster manufacturing PMI reports from core Eurozone countries had the opposite effect

Market Re-Cap

Growing optimism over the progress in tackling the Eurozone debt crisis together with higher than expected HSBC manufacturing PMI data from China helped risk-appetite in early European trade. In their weekend summit, the Eurozone officials said they planned to use the EFSF to provide partial guarantees to buyers of new Italian and Spanish bonds, while also creating a special purpose vehicle to attract funds from major emerging countries. These developments provided strength to European equities in early trade, however appetite for risk was dented somewhat as the session progressed, weighed upon by lacklustre manufacturing PMI data from the core Eurozone countries, together with uncertainty surrounding the issue of losses incurred by the private sector investors on their Greek debt holdings. The private sector participants seemed to be willing to take upto a 40% haircut, however Eurozone leaders wanted a 50%-60% loss. This resulted in European equities to come off their earlier highs, which in turn supported Bunds, while the Eurozone 10-year government bond yield spreads widened across the board. In the forex market, as the European session progressed, EUR/USD and GBP/USD came off their overnight highs to trade back in negative territory. In other news, weakness was observed in JPY overnight partly on the back of comments from the Japanese finance minister on further market interventions.

Moving into the North American open, the economic calendar remains thin, however Chicago Fed report from the US is scheduled for later in the session, and markets will keep a close eye on developments in the Eurozone. In fixed income, BoE’s Gilt purchase operation in the maturity range of 2015-2020, together with another Fed’s Outright Treasury Coupon Purchase operation in the maturity range of Feb’36-Aug’41, with a purchase target of USD 2.25-2.75bln are also scheduled for later in the session.

Asian Headlines:

•    Chinese HSBC Manufacturing PMI (Oct) M/M 51.1 vs. Prev. 49.9 (RTRS)

US Headlines:

PIMCO said they see more Fed stimulus in the US. Also, Fed's Kocherlakota said there could be a need for more Fed bond buying if the US economy is hit by an adverse shock or deflation and is not immediately opposed to buying MBS. (Sources/RTRS)           

In other news, the United States will likely suffer the loss of its triple-A credit rating from another major rating agency by the end of this year due to concerns over the deficit, Bank of America Merrill Lynch forecasts. (RTRS)

EU and UK Headlines:

The two main remaining options considered by the EU leaders’ in their weekend summit:
•    The EFSF would guarantee the first 20%-30% of losses investors might suffer if they bought the bonds of Italy or Spain at a primary auction and the sovereigns later defaulted.
•    To support the secondary market, the EFSF would create a special purpose vehicle (SPV) with private investors, sovereign wealth funds or other institutions, perhaps the International Monetary Fund, who would contribute paid-in capital.

In other news, ECB's Mersch said disadvantages of sovereign default outweigh advantages, adding that credibility of the monetary union could be damaged in case of a sovereign default in the Eurozone. (RTRS)

•    German Manufacturing PMI (Oct A) M/M 48.9 vs. Exp. 50.0 (Prev. 50.3)
•    French Manufacturing PMI (Oct P) M/M 49.0 vs. Exp. 48.0 (Prev. 48.2) (RTRS)

EQUITIES

Growing optimism over the progress in tackling the Eurozone debt crisis together with higher than expected HSBC manufacturing PMI data from China helped risk-appetite in early European trade. In their weekend summit, the Eurozone officials said they planned to use the EFSF to provide partial guarantees to buyers of new Italian and Spanish bonds, while also creating a special purpose vehicle to attract funds from major emerging countries. These developments provided strength to European equities in early trade, however appetite for risk was dented somewhat as the session progressed, weighed upon by lacklustre manufacturing PMI data from the core Eurozone countries, together with uncertainty surrounding the issue of losses incurred by the private sector investors on their Greek debt holdings. The private sector participants seemed to be willing to take upto a 40% haircut, however Eurozone leaders wanted a 50%-60% loss. This resulted in European equities to come off their earlier highs, and moving into the North American open, most European indices are trading in negative territory, with utilities and oil & gas as the worst performing sectors.

**Note: For US equities news in detail, kindly refer to the RANsquawk Daily US Equity Opening News report.

FX

As the European session progressed, EUR/USD and GBP/USD came off their overnight highs to trade back in negative territory. In other news, weakness was observed in JPY overnight partly on the back of comments from the Japanese finance minister on further market interventions.

COMMMODITIES

WTI and Brent crude futures have come off their overnight highs as disappointing European PMI data weighed on sentiment.

Oil & Gas News:
•    Kuwait’s oil minister said the region produced 2.9 MBPD of crude in September and they see current prices reasonable for exporters and importers, adding that OPEC will consider altering output in response to increased Libyan production in December.
•    Iran’s OPEC governor noted that Libya’s rising output would likely be absorbed by markets amid rising demand as colder weather reaches key importing nations.
•    Gulf countries are able to fill any shortage of oil on international markets to keep prices stable, the finance minister of the UAE said.

**Note: For commodities news in detail, kindly refer to the RANsquawk Daily Energy Commentary report.

 

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Mon, 10/24/2011 - 08:15 | 1803785 lolmao500
lolmao500's picture

http://www.france24.com/en/20111023-eu-ready-revise-bloc-treaty

European Union leaders on Sunday agreed to change the bloc's treaty if necessary in the interests of economic convergence and discipline, EU president Herman Van Rompuy said.

"We decided to explore the possibility of limited treaty change," Van Rompuy said. "The aim is deepening our economic convergence and strengthening economic discipline."

Mon, 10/24/2011 - 08:33 | 1803820 stopcpdotcom
stopcpdotcom's picture

What underhand plan are these crooks up to now?

Mon, 10/24/2011 - 09:30 | 1803995 reload
reload's picture

The plan has always been to use the `crisis` for the ends of the EU -Commission - now they will seek to move quickly to establish fiscal governance over EU members in the traditional unaccountable manner. No doubt any treaty changes will be trifling enough that none of the peoples of europe get any say in the matter.

Mon, 10/24/2011 - 08:29 | 1803814 ivars
ivars's picture

This was a productive weekend!

I think I finally managed to match them! Of course, crash (mimicking recession in q1 2012 in the USA and probaly worldwide) is there for all to be seen:

Now I have a really superb forecasting /history study interest tool . Have a look at exercise behind matching GREAT DEPRESSION and GREAT RECESSION timelines for the first time ( once  I managed to patternalize ( ?) OUT FED's grip on USA stock market prices)  and, as usual, better visibility charts plus explanations here:

http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&p=34732#p34730

And here:

http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&p=34732#p34732

The supplement chart for rereading the history of GREAT DEPRESSION and rethinking the future as time line can be extended as well:

http://farm7.static.flickr.com/6055/6273870574_8de9d22b08_o.png

http://farm7.static.flickr.com/6217/6273870954_52bd042a99_o.png

http://farm7.static.flickr.com/6232/6273871980_62a22ec234_o.png

Mon, 10/24/2011 - 08:59 | 1803889 jmcadg
jmcadg's picture

Which major emerging countries are going to be attracted to throwing their money down the hole that is the EU. Tools the lot of them.

Mon, 10/24/2011 - 09:02 | 1803903 lolmao500
lolmao500's picture
German government source says full parliamentary session to vote on EFSF leverage models on Wednesday

 

You know what would be nice? If they said FUCK NO!

Mon, 10/24/2011 - 09:53 | 1804074 MFL8240
MFL8240's picture

Tyler, Can I get your help?  I cannot understand how Gold and Silver are now being decribed as risky assets, can you explain? Seems to me the real risk is in the US bonds and dollar.

Mon, 10/24/2011 - 10:28 | 1804174 YesWeKahn
YesWeKahn's picture

"Kocherlakota said there could be a need for more Fed bond buying if the US economy is hit by an adverse shock or deflation and is not immediately opposed to buying MBS."

 

I don't think they can call it "buying". They are stealing because they have no money to buy. Printing money from their asz doesn't qualify as having that money the first place.

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