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Daily US Opening News And Market Re-Cap: September 7
From RanSquawk
- The German Constitutional Court rejected lawsuits aimed at blocking Germany's participation in the Eurozone bailouts; however said that the ruling is not a blank cheque for further bailouts
- A Eurozone source said that the IMF has agreed to substantially lower the initial estimate for the European banking sector's capital needs
- According to an article in the Irish Times, private sector participation in the Greek debt swap has so far reached the 75% mark
- Higher than expected German industrial production data rendered support to EUR, however GBP came under pressure following worse than expected industrial production data from the UK
Market Re-Cap
European equities traded higher for a vast majority of the session helped by news that the German Constitutional Court rejected lawsuits aimed at blocking Germany's participation in the Eurozone bailouts, together with a sharp increase in the German industrial production data. Financials received further support after a Eurozone source said that the IMF has agreed to substantially lower the initial estimate for the European banking sector's capital needs. Strength in equities weighed upon Bunds, and general tightening was observed in the Eurozone 10-year government bond yield spreads, with particular narrowing seen in the Italian/German spread partly on the back of market talk of the ECB buying in the Italian government debt. However, the Greek/German spread widened due to the ongoing concern surrounding the Greek bond swap issue, together with downbeat comments by the Dutch finance minister on the progress of the Greek programme. In other news, weakness in the USD-Index helped EUR/USD, GBP/USD and commodity-linked currencies; however GBP/USD came under some pressure following weaker than expected industrial production data from the UK. Also, higher than expected GDP reading from Australia overnight rendered additional strength to AUD.
Moving into the North American open, markets look ahead to the oil inventories report from the US together with Fed's Beige Book release later in the session. Bank of Canada's rate decision and the Canadian PMI data is also scheduled for later in the session. Markets will also keep a close eye on comments from President Obama as well as Fed's Evans and Williams.
Asian Headlines:
The BOJ maintained the key interest rate at a range of 0.0% to 0.1% by a unanimous vote and refrained from loosening policy further via an expansion of its asset buying plan. The BOJ kept the economic assessment unchanged and said Japan’s economy is picking up steadily. It further said that output and exports have almost returned to pre-quake levels. (RTRS)
US Headlines:
President Obama will unveil a USD 300bln package to create new jobs in an address to Congress on Thursday citing Democratic sources. (CNN)
• US MBA Mortgage Applications (Sep 2) W/W -4.9% vs. Prev. -9.6% (RTRS)
EU and UK Headlines:
• German Industrial Production SA (Jul) M/M 4.0% vs. Exp. 0.5% (Prev. -1.1%, Rev. to -1.0%)
• German Industrial Production NSA WDA (Jul) Y/Y 10.1% vs. Exp. 6.5% (Prev. 6.7%, Rev. to 6.6%)
• UK Industrial Production (Jul) M/M -0.2% vs. Exp. 0.2% (Prev. 0.0%)
• UK Industrial Production (Jul) Y/Y -0.7% vs. Exp. -0.4% (Prev. -0.3%)
• UK Manufacturing Production (Jul) M/M 0.1% vs. Exp. 0.0% (Prev. -0.4%)
• UK Manufacturing Production (Jul) Y/Y 1.9% vs. Exp. 1.9% (Prev. 2.1%)
• UK BRC Shop Price Index (Aug) Y/Y 2.7% vs. Prev. 2.8% (RTRS)
• Portuguese 3-month T-Bill auction for EUR 0.854bln, bid/cover 2.2 vs. Prev. 1.80 (yield 4.959% vs. Prev. 4.854%) (RTRS)
EQUITIES
European equities traded higher for a vast majority of the session helped by news that the German Constitutional Court rejected lawsuits aimed at blocking Germany's participation in the Eurozone bailouts, together with a sharp increase in the German industrial production data. Financials received further support after a Eurozone source said that the IMF has agreed to substantially lower the initial estimate for the European bank sector's capital needs. Moving into the North American open, equities continue to trade higher with industrials and financials as the best performing sectors.
FX
Weakness in the USD-Index helped EUR/USD, GBP/USD and commodity-linked currencies; whereas EUR/USD received further support following higher than expected industrial production data from Germany. However, GBP/USD came under some pressure after weaker than expected industrial production data from the UK. In other news, AUD received strength following better than expected GDP data from Australia overnight.
• Australian GDP (Q2) Q/Q 1.2% vs. Exp. 1.0% (Prev. -1.2%, Rev. -0.9%)
• Australian GDP (Q2) Y/Y 1.4% vs. Exp. 0.7% (Prev. 1.0%) (RTRS)
COMMODITIES
WTI crude futures traded in minor positive territory in early trade as cyclone and poor weather builds in the Gulf of Mexico.
Oil & Gas News:
• Iran has been importing 4-5 cargoes of gasoline per month, most supplied by Chinese companies according to industry sources.
• Russia has pumped the first gas into a new pipeline running under the Baltic Sea to Germany, which will tighten Moscow’s grip on the continent’s lucrative gas markets.
• Syrian finance minister said today that they’ll be looking at Russia, China and non-Arab countries as oil-buyers. He also said not concerned about EU sanctions as no direct impact on economy.
Geopolitical News:
• Intelligence sources reveal that Muammar Qaddafi, two of his sons and several thousand fighters have gone to ground at Targan. This is a remote are in the Saharan, which lies several hundred kilometres southwest of the remote desert town of Jiffra which, is more than 1,500 kilometres from rebel-held Tripoli and Sirte.
Full report:
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Aussie GDP #s are a farce.
Why so?
Look up: Steve Keen. Book cooking is now the only option left as it becomes clear that we're entering the post-industrial world.
Did anyone ever really doubt this would be the eventual outcome?
And how can it not be a blank cheque, if it's legal at all? The EU should clearly sue the German courts for insinuating it is not.
It's like in Bush -v- Gore:
i.e. we'll let you off this time, but don't! Do it! AGAIN!
Seems German constitutional courts can only rule on matters German. And not the legality or otherwise of the activities of EU institutions, which is outside its jurisdiction. That said the EU courts could rule against German authorities if they were in breach of EU law.