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Daily US Opening News And Market Re-Cap: October 31

Tyler Durden's picture




 

Submitted by RanSquawk:

  • Japan intervened in the FX market overnight, which resulted in the weakening of JPY across the board. Japan’s vice finance minister said he believes the intervention is not over yet
  • Particular widening was observed in the Italian/German 10-year government bond yield spread as concerns persisted over the debt and political situation in Italy. There was market talk of the ECB buying in the Italian government debt
  • Strength in the USD-Index weighed upon EUR/USD, GBP/USD and commodity-linked currencies

Market Re-Cap

Despite measures to tackle the Eurozone debt crisis from last week's EU leaders' summit, the implementation details remained unclear and there remained uncertainty about the Chinese contribution in solving the crisis, which dented the appetite for risk. Furthermore, the OECD and UBS cut their respective growth forecast for the Euroarea, which also weighed on the sentiment, and led European equities to trade lower, with underperformance seen in the Italian FTSE MIB and Spanish IBEX 35 indices. Weakness in equities provided support to Bunds, whereas the Eurozone 10-year government bond yield spreads widened across the board, with particular widening seen in the Italian/German spread on the back of debt and political concerns surrounding Italy. In the forex market, Japan intervened in the FX market overnight, which resulted in the weakening of JPY across the board. In other news, strength in the USD-Index weighed on EUR/USD, GBP/USD and commodity-linked currencies.

Moving into the North American open, markets look ahead to economic data from the US in the form of Chicago PMI, and NAPM-Milwaukee, together with the Canadian GDP figures. In fixed income, BoE's Gilt purchase operation in the maturity range of 2015-2020 allied with 3-, and 6-month T-Bill auctions from the US are also scheduled. The Fed will also be releasing its next tentative outright treasury operation schedule later in the session.

Asian Headlines:

China’s CPI growth may slow to 2.8% in 2012, from an estimated 5.5% for this year, citing PBOC adviser Li Daokui. (Sources)

US Headlines

US House democrat leader Nancy Pelosi said she could back the repatriation of overseas US corporate profits if it is tied to job creation. (CNBC)

Note: BarCap US Treasury month-end extension seen at +0.09yrs

EU and UK Headlines:

According to Xinhua news-agency, China cannot take up the role as a saviour to the EU, nor provide a cure for the European malaise due to the unprecedented debt crisis. In related news, EU’s Juncker said it made sense for China to invest its surplus in Europe to help the region overcome its debt crisis, but this would not involve political concessions. EFSF’s head Regling said the EFSF is authorised to issue debt in any currency it wants and could issue bonds in CNY depending on whether Beijing wants it. (Xinhua/RTRS)

•    Eurozone CPI Estimate (Oct) Y/Y 3.0% vs. Exp. 2.9% (Prev. 3.0%)
•    Eurozone Unemployment Rate (Sep) M/M 10.2% vs. Exp. 10.0% (Prev. 10.0%, Rev. to 10.1%)
•    UK Net Consumer Credit (GBP) (Sep) M/M 0.6bln vs. Exp. 0.4bln (Prev. 0.5bln)
•    UK Net Lending Sec. on Dwellings (GBP) (Sep) M/M 0.3bln vs. Exp. 0.6bln (Prev. 0.6bln, Rev. to 0.5bln) (RTRS)

•    German 12-month Bubill auction for EUR 1.933bln, bid/cover 4.30 vs. Prev. 2.50 (yield 0.3460% vs. Prev. 0.2420%)
•    Belgian OLO auction for EUR 665mln, 4.00% Mar'14, bid/cover 1.71 vs. Prev. 3.15 (yield 2.739% vs. Prev. 2.357%)
•    Belgian OLO auction for EUR 530mln, 3.50% Jun'17, bid/cover 2.11 vs. Prev. 2.78 (yield 3.897% vs. Prev. 3.819%)
•    Belgian OLO auction for EUR 960mln 4.25% Sep'21, bid/cover 1.65 vs. Prev. 1.80 (yield 4.372% vs. Prev. 3.751%) (RTRS)

Note: BarCap European Treasury month-end extension seen at +0.11yrs

EQUITIES

Despite measures to tackle the Eurozone debt crisis from last week's EU leaders' summit, the implementation details remained unclear and there remained uncertainty about the Chinese contribution in solving the crisis, which dented the appetite for risk. Furthermore, the OECD and UBS cut their respective growth forecast for the Eurozone, which also weighed on the sentiment, and led European equities to trade lower, with underperformance seen in the Italian FTSE MIB and Spanish IBEX 35 indices. Also, strength in the USD-Index weighed upon oil & gas and basic materials sectors. Moving into the North American open, equities continue to trade lower, with financials and basic materials as the worst performing sectors.

FX

Japan intervened in the FX market overnight, which resulted in the weakening of JPY across the board. As the European session progressed, USD/JPY did pare back some of the earlier gains, however as of 1109GMT, the pair was still trading up over 200pips on the session. In other news, strength in the USD-Index weighed on EUR/USD, GBP/USD and commodity-linked currencies.

COMMMODITIES

WTI and Brent crude futures fell with traders cautious ahead of the G20 leaders’ meeting later this week that will focus largely on the European debt crisis, together with strength in the USD-Index.

Oil & Gas News:

•    Iran’s OPEC governor said supply and demand in world oil markets are balanced and he sees no need for an emergency meeting for OPEC. In related news, OPEC will not boost oil production while Iran holds the rotating presidency of the group according to Richard Jones, the deputy executive director of IEA.
•    A reasonable price for crude oil is between USD 80 and USD 100 a barrel, according to the UAE oil minister.
•    According to IEA’s former executive Tanaka, sustained Brent crude prices over USD 100 a barrel will cause as much damage to the global economy as the record prices of 2008 which preceded the financial crisis. In related news according to the IEA Deputy executive director, Richard Jones, another 500,000 BPD is needed from OPEC and high oil prices are driven by tight supply.

 

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Mon, 10/31/2011 - 07:39 | 1827947 EasterBunny
EasterBunny's picture

Is there an agreement amongst central banks, where any currency intervention must be accompanied by a PM blitz?

 

Mon, 10/31/2011 - 07:55 | 1827977 HedgeAccordingly
HedgeAccordingly's picture

monday morning charts - funny how we get this intervention on the pivot -  http://hedge.ly/tDVjOU

Mon, 10/31/2011 - 08:45 | 1828057 msmith
msmith's picture

It's all about the USD today.  The DX appears to have made a bullish breakout.  If this move is sustained today, then it is likely to have huge implications on the markets with a "risk off" tone.  http://bit.ly/rO5KVH

Mon, 10/31/2011 - 11:42 | 1828665 Dr. Nancy
Dr. Nancy's picture

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