Daily US Opening News And Market Re-Cap: June 29

From Ran Squawk:

  • Greek opposition lawmaker Papadimitriou as well as the Socialist Party dissenter Robopoulos said they will vote for the fiscal plan
  • ECB's Stark said that a "Brady Bond" style solution would be in violation of the EU's no bailout clause, and rejected the idea that banks could exchange the Greek debt for paper guaranteed by the EU states
  • Bank of Spain reiterated ECB's Trichet comment on strong vigilance
  • EBA’s chairman said speculation that up to 15 banks failed stress tests were unfounded, adding that results are not finalised yet

Market Re-Cap:
Growing prospects that the Greek austerity measures will likely go through Parliament today enhanced risk-appetite, which in turn provided support to the EUR, equities and weighed upon the USD-Index. Strength in equities allied with a lack-lustre Bobl auction from Germany exerted pressure on Bunds, whereas Eurozone 10-year government bond yield spreads narrowed across the board. The EUR also received support after the Bank of Spain reiterated ECB's Trichet comment on strong vigilance. However, the currency came under some pressure after ECB's Stark said that a "Brady Bond" style solution would be in violation of the EU's no bailout clause, and rejected the idea that banks could exchange the Greek debt for paper guaranteed by the EU states.
Moving forward, the Greek austerity vote remains the main focus of the market, however pending home sales and DOE inventories data from the US, as well as Canadian CPI figures are also due. In fixed income, USD 29bln 7-year Note auction, allied with another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Aug'28-May'41, with a purchase target of USD 2-3bln, are also scheduled for later in the session.
Asia Headlines:
China’s inflation is ‘most likely chronic’ and will remain a problem over the next decade, Li Daokui, an academic advisor to the PBOC said. Meanwhile China’s inflation is likely to average 5.3% this year, according to Li Jianwei, director of the macro economy research institute under the State Council’s Development Research Centre. (Sources)
•    Japan Industrial Production (May P) M/M 5.7% vs. Exp. 5.5% (Prev. 1.6%)
•    Japan Industrial Production (May P) Y/Y -5.9% vs. Exp. -6.3% (Prev. -13.6%) (RTRS)
Global News:
According to Bank of America, the withdrawal of excess liquidity measures could potentially translate into more volatility in the third quarter of this year. Bank of America also said that it is cutting back its overweight position in global equities, reducing its underweight in bonds, and pushing its commodity exposure back to neutral, as the next few months will offer a better entry point to reload on risky assets. (Sources)
US Headlines
Fed’s Bullard said the Fed, amid persistent worries about Europe's sovereign debt crisis, last week quietly approved the extension of a crisis-lending program that allows the ECB to tap the U.S. for USD. The Fed's dollar-lending agreements with the ECB as well as the central banks of England, Canada, Japan and Switzerland were scheduled to expire Aug 1st, the Fed and other central banks haven't yet disclosed renewal of the agreements, known as swap lines. (WSJ)
In other news, California legislature passed budget to close its USD 27.1bln deficit, and Governor Jerry Brown is expected to sign the budget by Friday. (WSJ)
•    US MBA Mortgage Applications (Jun 24) W/W -2.7% vs. Prev. -5.9% (RTRS)
BarCap month-end extensions: US Treasury +0.06 years
EU and UK Headlines:
Greek banks’ potentially crucial contribution to a voluntary debt rollover as part of a fresh bail-out plan for the crisis-hit country could be held back by European Central Bank restrictions on their activities. The ECB has not opposed a voluntary debt roll over, but it has ruled out rolling over the estimated EUR 45bln in Greek government bonds it owns and warned against any steps that would be deemed a default by rating agencies. (FT-More)
In other news, Greece’s planned sale of state assets may not bring in more than a quarter of the earmarked EUR 50bln unless more prime land and cultural heritage are added to the sales list, citing a report by Privatisation Barometer, a Milan based institute backed by Fondazione Eni Enrico Mattei and KPMG. (FT-More)
•    Eurozone Business Climate Indicator (Jun) M/M 0.92 vs. Exp. 0.90 (Prev. 0.99, Rev. to 0.98)
•    Eurozone Consumer Confidence (Jun F) M/M -9.8 vs. Exp. -10.0 (Prev. -10.0)
•    Eurozone Economic Confidence (Jun) M/M 105.1 vs. Exp. 105.0 (Prev. 105.5)
•    Eurozone Industrial Confidence (Jun) M/M 3.2 vs. Exp. 3.5 (Prev. 3.9, Rev. to 3.8)
•    Eurozone Services Confidence (Jun) M/M  9.9 vs. Exp. 9.0 (Prev. 9.2, Rev. to 9.3)
•    UK Net Consumer Credit (May) M/M 0.2bln vs. Exp. 0.4bln (Prev. 0.5bln)
•    UK Net Lending Sec. on Dwellings (May) M/M 1.1bln vs. Exp. 0.7bln (Prev. 0.7bln, Rev. to 1.0bln)
•    UK Mortgage Approvals (May) M/M 45.9K vs. Exp. 46.3K (Prev. 45.2K, Rev. to 45.4K) (RTRS)
•    German Bobl auction for EUR 4.825bln, 2.75% 08-Apr-16, bid/cover 1.1 vs. Prev. 1.9 (yield 2.160% vs. Prev. 2.450%, retention 19.60% vs. Prev. 18.24%) (RTRS)
BarCap month-end extensions: Euro Sovereign Index +0.06 years
BarCap month-end extensions: Sterling Index +0.22 years

Full report:

Daily Us Opening News


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