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Daily US Opening News And Market Re-Cap: September 13
From RanSquawk:
- FT wrote that the Italian government is working on measures to facilitate the sale of the Italian government paper to China provided positive sentiment to the market early in the European session. However, there was market talk that China will not buy Italian bonds but instead seek various infrastructure investments
- WSJ wrote, citing an unnamed BNP Paribas executive, that the bank could no longer borrow USDs from the money market. However, this was later rejected by the company, which said that financing is at its normal level
- According to a French government source, Chancellor Merkel and President Sarkozy will make an announcement on Greece today, and are determined to do what is necessary on crisis. However, a Sarkozy spokesman rejected report on a Franco-German initiative, however Sarkozy may comment after meeting with Van Rompuy
Market Re-Cap
An article in the FT saying that the Italian government is working on measures to facilitate the sale of the Italian government paper to China provided positive sentiment to the market early in the European session.
However, the move was short lived on the back of market talk that China will not buy Italian bonds but instead seek various infrastructure investments, which resulted in a sell-off in equities. Equities came under further pressure after an article in the WSJ wrote, citing an unnamed BNP Paribas executive, that the bank could no longer borrow USDs from the money market, which also resulted in a sharp decline in Eurodollar futures. Weakness in equities provided support to Bunds, and the Eurozone 10-year government bond yield spreads with respect to Bunds generally widened. Particular widening was observed in the Italian/German spread leading up to and following a lacklustre 5-year Italian BTP auction, where the yield hit an all time high. Elsewhere, EUR/USD traded in negative territory during the European session, however did come off its earlier lows as the USD-Index weakened, together with comments from the Italian Prime Minister who said that the Italian Parliament will approve the budget proposals tomorrow. Also, AUD/USD remained under pressure following worse than expected business conditions/confidence data from Australia overnight. In other forex news, GBP/USD lost ground after BoE's Posen said that the central bank should resume its quantitative easing programme.
Moving into the North American open, markets look ahead to economic data from the US in the form of import price index, IBD/TIPP economic optimism, and the monthly budget statement. A number of key speakers are scheduled for later, including German Chancellor Merkel, and French President Sarkozy. In fixed income, USD 21bln 10-year Note auction is due later in the session, and the NY Fed will be releasing the next schedule for its Tentative Outright Treasury Operation.
Asian Headlines:
Japanese PM Noda said a strong JPY is threatening Japan with an unprecedented danger of the industry ‘hollowing out’ and says they need to do all possible in cooperation with BoJ to prevent the industry ‘hollowing out’. They are to compile new growth strategy by the year-end. Also, Japanese finance minister Azumi said the size of the third extra budget likely to exceed JPY 10tln. (RTRS)
US Headlines
Fed’s Bullard said no decision has yet been made on whether the Fed will offer monetary accommodation given further slowing in the economy, and if the Fed decides to ease policy further it should discard policy changes with fixed end dates. (RTRS)
In other news, President Obama sent his job bill to Congress and proposed paying for it by eliminating USD 467bln in tax breaks for richer Americans and companies, meeting immediate resistance from Republicans. (RTRS)
Elsewhere, Bill Gross increased exposure to Treasuries dramatically in August. Gross held 16% in US Treasuries and Treasury-related securities as of the end of August 31st, up from 10% as of the end of July. (RTRS)
EU and UK Headlines:
• UK CPI (Aug) Y/Y 4.5% vs. Exp. 4.5% (Prev. 4.4%)
• UK RPI (Aug) Y/Y 5.2% vs. Exp. 5.1% (Prev. 5.0%)
• UK Visible Trade Balance (GBP/mln) (Jul) M/M -8922 vs. Exp. -8500 (Prev. -8873)
• UK DCLG House Prices (Jul) Y/Y -1.5% vs. Exp. -1.2% (Prev. -2.0%)
• UK RICS House Price Balance (Aug) M/M -23% vs. Exp. -23% (Prev. -22%) (RTRS)
• Italian BTP auction for EUR 3.865bln, 4.75% Sep'16, bid/cover 1.279 (yield 5.60%)
• Belgian 3-month T-Bill auction for EUR 1.980bln, bid/cover 1.85 vs. Prev. 2.08 (yield 1.067% vs. Prev. 0.817%)
• Belgian 12-month T-Bill auction for EUR 1.035bln, bid/cover 2.26 vs. Prev. 2.00 (yield 1.420% vs. Prev. 1.113%) (RTRS)
EQUITIES
An article in the FT saying that the Italian government is working on measures to facilitate the sale of the Italian government paper to China provided positive sentiment to the market early in the European session.
However, the move was short lived on the back of market talk that China will not buy Italian bonds but instead seek various infrastructure investments, which resulted in a sell-off in equities. Equities came under further pressure after an article in the WSJ wrote, citing an unnamed BNP Paribas executive, that the bank could no longer borrow USDs from the money market, however this news was later rejected by the company, which said that financing is at its normal level. A lacklustre 5-year BTP auction from Italy exerted further downward pressure on equities. As the session progressed, in a stark reversal of fortunes, equities pared back earlier losses to trade in positive territory, partly helped by comments from a French government source, who said that Chancellor Merkel and President Sarkozy will make an announcement on Greece today, and are determined to do what is necessary on crisis. Moving into the North American open, European indices are trading mixed, with financials and telecommunications as the best performing sectors.
FX
EUR/USD traded in negative territory during the European session, however did come off its earlier lows as the USD-Index weakened, together with comments from the Italian Prime Minister who said that the Italian Parliament will approve the budget proposals tomorrow. Also, AUD/USD remained under pressure following worse than expected business conditions/confidence data from Australia overnight. In other forex news, GBP/USD lost ground after BoE's Posen said that the central bank should resume its quantitative easing programme.
• Australian NAB Business Confidence (Aug) M/M -8 vs. Prev. 2
• Australian NAB Business Conditions (Aug) M/M -3 vs. Prev. -1 (RTRS)
COMMODITIES
WTI and Brent crude futures traded in a mixed session during earlier trade, following moves in the USD-Index.
Oil & Gas News:
• SocGen lowered its oil price forecast for 2011 and 2012, citing significantly slow growth in global oil demand, predicting that temporary bullish factors such as supply disruptions in Nigeria and the UK are likely to fade in the near future.
• A regional power struggle is emerging over Libya’s energy wealth as the cities of Tripoli and Benghazi compete to host the powerful state-owned National Oil Company. In related news Libyan oil firm Agoco says production from Sarir oilfield has restarted and reached 160,000 BPD.
• North Korea and Russia are set to hold their first joint defence drill as early as this year in an attempt to balance the US, South Korea and Japan’s influence on the Korean peninsula.
• IEA Monthly Oil Report: Uncertain global economic and financial prospects underpinned volatile oil future prices in August and early September. Global oil demand is revised down by 0.2 MBPD for 2011 and by 0.4 MBPD for 2012. World oil supply rose by 1.0 MBPD in August to 89.1 MBPD. August OPEC crude oil output was up by 165 KBPD to 30.26 MBPD. Global refinery crude runs have been revised down by close to 0.3 MBPD for both Q3 2011 and Q4 2011. Libyan oil output capacity average estimate raised average by 100,000 BPD to 300,000 BPD in Q4 2012. Sees Libyan oil output capacity at 350-400,000 BPD by end of 2011, rising to 1.1 MBPD in Q2 2012
Geopolitical News:
• Russia has rejected Western calls for wider sanctions on Syria over its violent crackdown on protests against President Bashar al-Assad, in which the UN sais 2600 people have been killed.
• The chief of Libya's revolutionary movement has urged a cheering crowd in Tripoli to strive for a civil, democratic state, while loyalists of fugitive dictator Muammar Gaddafi killed at least 15 opposition fighters in an attack on a key oil town in Libya's east.
Full report:
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Extend and Pretend is alive. It's alive I Tell You. It's Alive. LOL
China is the new deus ex machina? My god, what has the world come to...
It's easy for China. They lots of U.S. Dollars to spend. Why not give it for Bailouts.
Spinal reflex arcs don't count.
Weird - I read it as "the sale of the Italian government to China" first time. Worth a try, I suppose...
So the rumor/lie has succeeded. (sarcon) The SEC has got better things to do anyway. (sarcoff)
At 6:00 A.M. Dow Futures @-129 At 7:30 Dow Futures +15 Now Negative. HFT frenzie I say.
They have no ammo left if all they have now is fake rumours.
They are getting clutching at straws to hold this up
Is this a sign of the End Times?? Roubini Offering Free Trial to Roubini.com
http://twitter.com/#!/Nouriel/statuses/113570805950054400
Indeed...whatever China is buying should be sold immediately. These guys are serial capital misallocators. But as for that, we will probably learn tomorrow, through a new round of rumors, that China is buying nothing...but is just working with various media outlets to spike the Euro to create better exit points on all the Euros it has bought in the last 12 months.
But as for that, we will probably next learn that China has not bought many Euros at all, but instead worked with certain media firms to plant the idea so that they could buy USDs at a lower price.
But as for that....and as for this...beneath it all is a corpupt cabal of US criminal bankers making money on all the dislocations they create.
And credibility is breathing shallow now, and turning pale, and the time to obliterate the equity markets is near to hand.
National honour compels me to say that our own patriotic bankers are easily equal to their US colleagues in their corruption and manipulation of the markets for their own enrichment. ;-)
It could all be bullshit. But the computers seem to be in buy mode, sellers seem done, and market is oversold...so up is the short term...no matter how bad Europe is ...be careful on the short side,,,it feels like a bear trap....
Let them Buy. Cash and Physical is the only safe investment right now.
If you need a parking space, short term treasuries are cool. Who cares about rate of return.
Just maintain until they blow up the Euro Banks.
No end in sight for QE and ZIRP.
Human sacrifice, dogs and cats living together...mass hysteria! ~Dr. Peter Venkman (Bill Murray)
Check out new ticker SPYGD. SPY vs. GLD. I'm assuming it is long-short, but I can't find any good information on it.
I guess we have next week´s rumor: just out on a local news provider that the Brazilian Finance Minister - Guido Mantega (sounds Italian?) - is going to discuss aid to EU with other BRICs next week.
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