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Daily US Opening News And Market Re-Cap: September 9

Submitted by Tyler Durden on 09/09/2011 08:29 -0400

Market participants noted a deadline for the Greek debt swap programme today, however its successful conclusion remained in doubt, which promoted risk-aversion
French bank shares witnessed particular underperformance, and shares of Societe Generale ventured below the level at the time of Lehman crisis
The IMF chief Lagarde said that some banks need additional capital and the risk of a liquidity crisis cannot be dismissed
CHF came under pressure across the board after the Swiss economy minister said that CHF is still massively overvalued

Market Re-Cap

Risk-aversion remained the predominant theme during the European session today, which weighed on equities and provided support to Bunds, with general widening seen in the Eurozone 10-year government bond yield spreads with respect to Bunds. Market participants noted a deadline for the Greek debt swap programme today, however its successful conclusion remained in doubt, which in turn weighed on financials. French bank shares witnessed particular underperformance, and shares of Societe Generale ventured below the level at the time of Lehman crisis. Comments from the IMF chief Lagarde, who said that some banks need additional capital and the risk of a liquidity crisis cannot be dismissed, exerted further downward pressure on banking shares. Elsewhere, strength in the USD-Index weighed upon EUR/USD, GBP/USD and commodity-linked currencies, whereas losses in GBP/USD were exacerbated after stops were triggered to the downside below the 1.5950 level. Also, CAD came under pressure across the board following an unexpected decline in the net change in employment data from Canada, and as the Canadian unemployment rate came out higher than expected. In other news, despite earlier gains, a sharp fall was observed in the Spot Gold after stops were triggered to the downside below the USD 1,865 per ounce level.

Moving into the North American open, markets look ahead to the wholesale inventories/sales data from the US together with another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Mar'17-Aug'18, with a purchase target of USD 2.75-3.50bln. Market participants will also keep a close eye on any developments related to the Greek debt swap programme.

Asian Headlines:

•    Japanese GDP (Q2 F) Q/Q -0.5% vs. Exp. -0.5% (Prev. -0.3%)
•    Japanese GDP Annualised (Q2 F) Q/Q -2.1% vs. Exp. -2.1% (Prev. -1.3%)
•    Chinese CPI (Aug) M/M 6.2% vs. Exp. 6.2% (Prev. 6.5%)
•    Chinese PPI (Aug) Y/Y 7.3% vs. Exp. 7.2% (Prev. 7.5%)
•    Chinese Industrial Production (Aug) Y/Y 13.5% vs. Exp. 13.7% (14.0%)
•    Chinese Retail Sales (Aug) Y/Y 17.0% vs. Exp. 17.0% (Prev. 17.2%) (RTRS)

US Headlines:

President Obama challenged Congress to enact a USD 447bln package of tax cuts and new spending to revive a stalled job market, but he faces an uphill fight to win over Republicans and restore public faith in his economic stewardship. Tax cuts for businesses and workers are at centre of jobs plan. (RTRS)

In other news, Fed’s balance sheet was USD 2.842tln in the week ending September 7th compared with USD 2.838tln in the week ending August 31st. Also foreign central banks’ overall holdings of US marketable securities at the Fed fell USD 10.78bln in the week ending September 7th to stand at USD 3.474tln. (RTRS)

EU and UK Headlines:

ECB’s Stark said the ECB stands ready to intervene in the bond market if its low interest rates are not translated into lending rates. “However, this is a temporary measure, not a permanent measure. Stark also said he was “very optimistic” on progress made in Ireland in addressing its fiscal problems, and that the ECB and the IMF have been very clear in their messages on what Greece needs to deliver. (RTRS)

•    Italian GDP SA and WDA (Q2 F) Q/Q 0.3% vs. Exp. 0.3% (Prev.0.3%)
•    Italian GDP SA and WDA (Q2 F) Y/Y 0.8% vs. Exp. 0.8% (Prev.0.8%)
•    UK PPI Input NSA (Aug) Y/Y 16.2% vs. Exp. 16.8% (Prev. 18.5%, Rev. 18.3%)
•    UK PPI Output NSA (Aug) Y/Y 6.1% vs. Exp. 5.9% (Prev. 5.9%, Rev. 6.1%)
•    UK PPI Output Core NSA (Aug) Y/Y 3.6% vs. Exp. 3.4% (Prev. 3.3%, Rev. 3.4%) (RTRS)

EQUITIES

Risk-aversion remained the predominant theme during the European session today, which weighed on equities. Market participants noted a deadline for the Greek debt swap programme today, however its successful conclusion remained in doubt, which in turn weighed on financials. French bank shares witnessed particular underperformance, and shares of Societe Generale ventured below the level at the time of Lehman crisis. Comments from the IMF chief Lagarde, who said that some banks need additional capital and the risk of a liquidity crisis cannot be dismissed, exerted further downward pressure on banking shares. Elsewhere, strength in the USD-Index weighed upon the basic materials sector. Moving into the North American open, equities continue to trade lower, with financials and industrials as the worst performing sector.

FX

Strength in the USD-Index weighed upon EUR/USD, GBP/USD and commodity-linked currencies, whereas losses in GBP/USD were exacerbated after stops were triggered to the downside below the 1.5950 level. Also, CAD came under pressure across the board following an unexpected decline in the net change in employment data from Canada, and as the Canadian unemployment rate came out higher than expected. In other forex news, CHF weakened across the board after the Swiss economy minister said that CHF is still massively overvalued.

COMMODITIES

Moving into the NYMEX pit open, WTI crude futures continued to move lower as the USD-Index strengthened amid risk-averse trade.

Oil & Gas News:

• CME lowered NYMEX RBOB gasoline futures maintenance margins last night for speculators by 8.8% to USD 7,750 per contract from USD 8,500. CME also lowered Heating oil futures maintenance margins for specs by 10.3% to USD 6,500 per contract from USD 7,250.

Geopolitical News:

• The man tasked with running the new Libya reminded his forces that the war was not yet over as the latest deadline for the surrender of pro-Muammar Gaddafi towns loomed and fighters massed on both sides.
• President Bashar al-Assad’s opponents broke a taboo by appealing for foreign help to stop the killing of civilians ahead of Friday prayers that has regularly seen some of Syria’s worse bloodshed in six months of pro-democracy protests.