Daily US Opening News And Market Re-Cap: June 30

From an RanSquawk:

  • Markets await further details on the implementation of the Greek austerity measures
  • ECB's Trichet said that the ECB is in a state of strong vigilance, which signals a possible change of rates
  • According to a source, rolled over volume for the Greek debt in a German plan could be in low-to-mid single digit billions Euros. Statement from the German finance minister is due at 1400 BST

Market Re-Cap
After trading higher in early European trade, equities pared back some of their gains as focus remained on the Greek austerity implementation details. In the forex market, EUR received support after ECB's Trichet said that the ECB is in a state of strong vigilance, which signals a possible change of rates, allied with news that German banks and the German government have agreed on a Greek debt plan. However, GBP/USD remained under pressure partly on the back of market talk that US names and a UK clearer were selling in the pair, with speculation of month-end demand from the Bundesbank assisting the rise EUR/GBP.
Moving into the North American open, markets look ahead to key US economic data in the form of Initial/Continuing Jobless Claims and Chicago PMI figure, allied with GDP data from Canada. In fixed income, there is another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Dec'16 - Jun'18, with a purchase target of USD 4-5bln.
Asia Headlines:
China’s GDP growth in H1 of 2011 is expected to reach 9.5% while its CPI likely grew 5.3% from a year earlier, according to China Securities Journal citing the State Information Centre. The government think-tank also forecasted the CPI would likely post 4.5%-5.5% growth in H2 of the year. (China Securities Journal)
In other news, the PBOC will reduce frequency of reserve requirement increases and rely on interest-rate liberalisation, CNY internationalisation and bill sales to soak up excess liquidity, Bank of China’s economists said. Bank of China estimates average Q3 CPI 5%, down from 5.5% in Q2. Meanwhile China should continue to raise interest rates to rein in persistent inflation, Li Daokui, advisor to the central bank said. (RTRS/Sources)
•    Japan Markit/JMMA Manufacturing PMI (Jun) M/M 50.7 vs. Prev. 51.3 (RTRS)
US Headlines
S&P said the US would immediately have its top-notch credit rating slashed to “selective default” if it misses a debt payment on August 4th. S&P’s managing director John Chambers said that US Treasury bills maturing on August 4th would be rated ‘D’ if the government fails to honor them. Treasures would be downgraded as well, but not as sharply. (RTRS)
Also, Moody’s warned it may downgrade the credit rating of US states and municipalities with strong credit links to the Federal government in the event of a downgrade of US sovereign ratings. Moody’s said earlier this month it may cut US ‘Aaa’ credit rating in August if the government misses debt payments because of a failure by congress to raise the nation’s debt ceiling. (RTRS)
In related news, Fitch said the US is risking its own governance and sovereign debt crisis through its brinkmanship over lifting its statutory government debt ceiling. Fitch believes an agreement will ultimately be reached and the US government will make full and timely payments on its debt. However, failure to act in a timely manner could imperil the US AAA status. (RTRS)
In other news, according to a White House adviser, the US Treasury could have new guidance on debt ceiling deadline as early as Friday, however the new debt ceiling guidance would not alter the current August 2nd deadline. (NBC/RTRS)
BarCap month-end extensions: US Treasury +0.06 years
EU and UK Headlines:
Belgian finance minister said he has seen progress on private sector involvement in the Greece crisis, adding that July 3rd Eurogroup meeting will agree on the release of next the tranche of loans for Greece. However, he does not expect a Eurogroup agreement on July 3rd on private sector involvement. (RTRS)
Portugal’s new government faces an uphill struggle to meet state deficit targets agreed with international creditors after the release of worse than expected results for the first three months of 2011. The centre-right coalition will have to cut the budget deficit by almost 3% of GDP by December to comply with the country’s EUR 78bln bail-out package agreed with the EU/IMF, according to data published by the National Statistics Institute. (FT-More)
•    Eurozone CPI Estimate (Jun) Y/Y 2.7% vs. Exp. 2.8% (Prev. 2.7%)
•    Germany Unemployment Change (000's) (Jun) M/M -8K vs. Exp. -17K (Prev. -8K)
•    German Unemployment Rate SA (Jun) M/M 7.0% vs. Exp. 7.0% (Prev. 7.0%)
•    German Retail Sales (May) M/M -2.8% vs. Exp. 0.5% (Prev. 0.6% Rev. to 0.0%)
•    UK Nationwide House Prices SA (Jun) M/M 0.0% vs. Exp. 0.0% (Prev. 0.3%)
•    UK Nationwide House Prices NSA (Jun) Y/Y -1.1% vs. Exp. -1.3% (Prev. -1.2%)
•    UK GfK Consumer Confidence Survey (Jun) M/M -25 vs. Exp. -24 (Prev. -21) (RTRS)
BarCap month-end extensions: Euro Sovereign Index +0.06 years
BarCap month-end extensions: Sterling Index +0.22 years
After trading higher in early European trade, equities pared back some of their gains as focus remained on the Greek austerity implementation details. In equity specific news, Lloyds Banking Group’s shares rose following co.’s strategic review, where it said that cost savings will enable an additional GBP 2bln of investments over the period 2011-2014. It also said that it will recommend progressive dividend payments after the EU restriction expires. Also, BG Group shares climbed after co. said it doubled its total reserve and resource estimates for its interests in Santos Basin, offshore Brazil. Moving into the North American open, equities are trading mixed with oil & gas and financials as best performing sector.

Full report:

Daily Us Opening News


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