Daily US Opening News And Market Re-Cap: June 23

From Ran Squawk:

  • Concerns surrounding the Greek debt, along with weaker than expected German and French manufacturing PMI data promoted risk-aversion
  • Strength in the USD-Index weighed upon EUR/USD, GBP/USD and commodities

Market Re-Cap

Risk-aversion remained the dominant theme during the European session on the back of the ongoing Greek debt concern, allied with worse than expected manufacturing PMI data from core Eurozone countries like France and Germany. This resulted in weakness in European equities, which provided support to Bunds, and also observed widening of Eurozone 10-year government bond yield spreads across the board. In the forex market, strength in the USD-Index weighed upon EUR/USD and GBP/USD, whereas weakness in commodities exerted downward pressure on commodity-linked currencies.

Moving into the North American open, markets look ahead to key economic data from the US in the form of jobless claims, Chicago Fed and new home sales. In fixed income, 2-, 5-, and 7-year Note refunding announcement, another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Aug'21-Nov'27, with a purchase target of USD 1-1.5bln, and USD 7bln 30-year TIPS auction are also scheduled for later.

Asia Headlines:

An earthquake with a preliminary magnitude of 6.8 struck off the coast of Iwate prefecture in northeast Japan today, one of the areas devastated by the March 11th quake and tsunami, but there were no immediate reports of damage or injuries. (RTRS)

In other news, China may “appropriately” slow the pace of reserve requirement ratio increases in H2 of this year and may raise interest rates instead. China should raise benchmark interest rates soon to tame inflation and accelerate economic restructuring, even though a move could slow growth. (China Securities Journal)

  • HSBC Flash China Manufacturing PMI (Jun) M/M 50.1 vs. Prev. 51.1 (RTRS)

US Headlines

Democratic leaders called for new spending and tax cuts to boost the sluggish US economy setting up a fresh hurdle for bipartisan efforts to head off a government debt default this summer. At the same time, a new report by the non-partisan Congressional Budget Office, warned that the country could face a European-style debt crisis unless Washington cuts spending or raises taxes. (RTRS)

BarCap month-end extensions: US Treasury +0.06 years

EU and UK Headlines:

Greek default is “inevitable” and “the only question is when it will occur” given the country’s Debt/GDP ratio of more than 150%, according to Harvard University Professor Martin Feldstein. (FT)

In other news, just days before a crucial vote in the Greek Parliament determines the fate of the government’s midterm fiscal plan, party lines are looking increasingly blurred. Speaking on Skai Television on Wednesday, PASOK MP Alexandros Athanasiadis said that he is not going to vote in favour of the new austerity measures. (Kathimerini)

  • Eurozone Manufacturing PMI (Jun A) M/M 52.0 vs. Exp. 53.8 (Prev. 54.6)
  • Eurozone Services PMI (Jun A) M/M 54.2 vs. Exp. 55.5 (Prev. 56.0), lowest since December
  • Eurozone Composite PMI (Jun A) M/M 53.6 vs. Exp. 55.1 (Prev. 55.8), lowest since October 2009
  • German Manufacturing PMI (Jun A) M/M 54.9 vs. Exp. 57.0 (Prev. 57.7)
  • German Services PMI (Jun A) M/M 58.3 vs. Exp. 55.7 (Prev. 56.1)
  • French Manufacturing PMI (Jun P) M/M 52.5 vs. Exp. 54.3 (Prev. 54.9), lowest in 22-months
  • French Services PMI (Jun P) M/M 56.7 vs. Exp. 61.0 (Prev. 62.5), 6-month low
  • UK CBI Reported Sales (Jun) M/M -2 vs. Exp. 13 (Prev. 18)
  • UK BBA Loans for House Purchase (May) M/M 30,509 vs. 30,000 (Prev. 29,355, Rev. to 29,747) (RTRS)
  • UK Index-Linked Gilt mini-tender for GBP 0.45bln, 0.50% 2050, bid/cover 2.17 vs. Prev. 1.97 (RTRS)

BarCap month-end extensions: Euro Sovereign Index +0.06 years
BarCap month-end extensions: Sterling Index +0.22 years

Daily Us Opening News


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