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Daily US Opening News And Market Re-Cap: October 28

Tyler Durden's picture




 

From RanSquawk:

  • Chinese vice finance minister said details on the expansion of the European bailout fund is still unclear, adding that purchases of EFSF bonds are not on the G20 agenda. Also, EFSF’s Regling said he does not expect to reach a conclusive deal with Chinese leaders during his visit to Beijing
  • The German Constitutional Court halted the use of a special parliamentary committee that was recently created to decide on changes to the Eurozone’s bailout fund in emergency situations
  • Meanwhile, a German senior coalition lawmaker said the Constitutional Court's decision means the EFSF secondary market bond purchases will be de facto impossible until a verdict, as Bundestag plenary cannot meet confidentially
  • Lacklustre BTAN auctions from Italy dented appetite for risk

Market Re-Cap

Most European indices traded in positive territory during the early session however gains were capped as market participants awaited further implementation details on the measures agreed by the EU leaders in their recent summit. The oil & gas sector underperformed, weighed upon by weakness in BP shares partly on the back of news that EU regulators have proposed stricter safety standards for offshore oil and natural gas exploration. Elsewhere, weakness was observed in Bunds, and the move was exacerbated after stops were triggered to the downside below the 133.00 level, whereas stops were also taken below the 126.00 level in Gilts. Meanwhile, marginal narrowing was observed in the Eurozone 10-year government bond yield spreads with respect to bunds in early trade, however widening was observed in the Italian/German and French/German following lacklustre BTP auctions from Italy, which also provided support to Bunds. Appetite for risk was dented further after a German Constitutional Court halted the use of a special parliamentary committee that was recently created to decide on changes to the Eurozone’s bailout fund in emergency situations. In the forex market, the USD-Index traded in positive territory for a vast majority of the European session, however EUR/USD and GBP/USD lacked any firm direction. Elsewhere, EUR came under pressure after the release of weak BTP auction results from Italy.

Moving into the North American open, markets look ahead to key economic data from the US in the form of personal income/spending, PCE core and University of Michigan confidence. In fixed income, another Fed's Outright Treasury Coupon sales operation in the maturity range of Oct'13-Feb'14, with a sales target of USD 8-9bln is also scheduled for later. Markets will also keep a close eye on US corporate earnings from the likes of Chevron, and Merck.

Asian Headlines:

•    Japanese Jobless Rate (Sep) M/M 4.1% vs. Exp. 4.5% (Prev. 4.3%)
•    Japanese National CPI (Sep) Y/Y 0.0% vs. Exp. 0.1% (Prev. 0.2%)
•    Japanese Industrial Production (Sep P) M/M -4.0% vs. Exp. -2.1% (Prev. 0.6%)
•    Japanese Industrial Production (Sep P) Y/Y -4.0% vs. Exp. -2.3% (Prev. 0.4%) (RTRS)

US Headlines

US Republicans proposed a USD 2.2tln deficit reduction plan heavy on spending cuts and light on tax increases. The Republican plan proposes cutting USD 500bln from the Medicare health insurance program for retirees, in part by raising premium. It would also cut USD 185bln from the Medicaid health plan for the poor and USD 100bln from other healthcare programs.  (RTRS)

In other news, Fed’s balance sheet stood at USD 2.829tln, on October 26th, down from USD 2.835tln a week earlier. Also, foreign central banks’ overall holdings of US marketable securities at the Fed fell USD 19.60bln in the week ended October 26th, to stand at USD 3.392tln. (RTRS)

EU and UK Headlines:

The German Constitutional Court Friday halted the use of a special parliamentary committee that was recently created to decide on changes to the euro zone's bailout fund in emergency situations. A formal ruling is still to come, but parliament's budget committee is meeting Friday afternoon to discuss the matter. If the constitutional court ultimately rules the special committee unconstitutional, it could hinder speedy changes to the EFSF. (WSJ)

In other news, EFSF’s CEO Regling said he does not expect to reach a conclusive deal with Chinese leaders during a visit to Beijing but expects the surplus rich country will continue to buy bonds issued by the fund. He added that the bailout deal with Greece was an exceptional case and he saw no need to repeat it for other nations. Regling added that the EFSF may explore with the IMF setting up a SPV via which investment could be made to support Europe. (RTRS)

•    UK GfK Consumer Confidence Survey (Oct) M/M -32 vs. Exp. -30 (Prev. -30) (RTRS)

•    Italian BTP auction for EUR 3.08bln, 4.25% Jul'14, bid/cover 1.35 vs. Prev. 1.36 (yield 4.93% vs. Prev. 4.680%)
•    Italian BTP auction for EUR 0.871bln, 4.25% Sep'19, bid/cover 1.62 vs. Prev. 1.35 (yield 5.810% vs. Prev. 4.030%)
•    Italian BTP auction for EUR 2.980bln, 5.00% Mar'22, bid/cover 1.27 vs. Prev. 1.37 (yield 6.060% vs. Prev. 5.860%) (RTRS)

EQUITIES

Most European indices traded in positive territory during the early session however gains were capped as market participants awaited further implementation details on the measures agreed by the EU leaders in their recent summit. The oil & gas sector underperformed, weighed upon by weakness in BP shares partly on the back of news that EU regulators have proposed stricter safety standards for offshore oil and natural gas exploration. However, as the session progressed, equities came off their highs and ventured into negative territory following lacklustre BTAN auctions from Italy, together with news that the German Constitutional Court halted the use of a special parliamentary committee that was recently created to decide on changes to the Eurozone’s bailout fund in emergency situations. Moving into the North American open, most European indices are trading in negative territory, with oil & gas and financials as the worst performing sectors.

The USD-Index traded in positive territory for a vast majority of the European session, however EUR/USD and GBP/USD lacked any firm direction. Elsewhere, EUR came under pressure after the release of weak BTP auction results from Italy, together with news that the German Constitutional Court halted the use of a special parliamentary committee that was recently created to decide on changes to the Eurozone’s bailout fund in emergency situations.

COMMMODITIES

WTI and Brent crude futures traded lower in early European trade as market participants awaited implementation details on measures agreed by EU leaders’ in their recent EU summit. 

Oil & Gas News:

•    EU regulators proposed stricter safety standards for offshore oil and natural gas exploration to curb the risk of major accidents after BP’s oil spill in the Gulf of Mexico. Draft regulation presented today by the European Commission sets risk assessment rules for offshore platforms and gives national regulators more powers to inspect their operations. It also extends 16-fold the zone in which companies will be held liable for environmental damage.

Geopolitical News:

•    Defence chiefs in South Korea and the US agreed to pursue a joint operational plan to counter potential provocations by North Korea at their annual bilateral security meeting in Seoul.

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

 

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Fri, 10/28/2011 - 08:23 | 1820309 oh_bama
oh_bama's picture

I have ONE AND ONLY ONE question to ask EVERYONE ONE OF YOU:

  • DID I TELL YOU GUYS BTFD A COUPLE OF WEEKS AGO??

 

Fri, 10/28/2011 - 09:20 | 1820498 Comay Mierda
Comay Mierda's picture

hate to say it but you were right.  whats your call now?

Fri, 10/28/2011 - 08:31 | 1820339 msmith
msmith's picture

The USD seems set to return to a bullish move higher which could be very signicant and signals big moves for the markets as very near.  The ES and SPX are set for another small push higher to complete their waves, while the EURUSD, USDCAD, and AUDUSD all point towards a bottom for the USD.   http://bit.ly/sW7hwm

Fri, 10/28/2011 - 08:42 | 1820374 LongSoupLine
LongSoupLine's picture

wow, all that legitimate, fact based folllow-up news to refute the hopium lies.  Too bad the rumors move the algos and the truth is ignored.  Futures are barely down...rigged tighter than an Eagle Scout knot project.

Fri, 10/28/2011 - 09:15 | 1820476 Zedge Hero
Zedge Hero's picture

This weeks episode concentrates on the Lufeng Riots a month ago in China and why communism is not the answer to Occupy Wall Street, Why? just ask the Chinese.

 

http://www.youtube.com/user/zedgehero

Do NOT follow this link or you will be banned from the site!