Christmas Eve Market Recap

While shortened Christmas Eve trading is traditionally the lowest volume day of the year, based on recent trends it may be difficult for today's action to stand out from the landscape thanks to an ongoing volume collapse, which however should make the even more traditional low-volume melt up that much easier. Sure enough, futures are modestly higher driven by their favorite signal, the EURJPY. Not surprisingly there has been particularly light newsflow with market closures in Germany, Italy and Switzerland in addition to early market closures for UK, France, Netherlands and Spain. Those markets that are open are trading in positive territory with the FTSE 100 being supported by BSkyB following an upbeat pre-market report for the company and their customer base, whilst the IBEX 35 is being supported by the financial sector. Overnight in China there was news of an injection of CNY 29bln via a 7-day reverse repo, although market commentators have said that this is more of a gesture than any meaningful intervention given the size of the country's banking market. Fixed income markets are particularly light with there being no trade in the bund future given the Eurex closure, with other trading products relatively flat given the lack of newsflow. However, the short-sterling curve has bear-steepened and thus continuing the trend seen since the end of last week as a result of both UK unemployment and UK GDP coming in better than expected.

Looking ahead, volumes are expected to remain thin, with the release of US Durable Goods Orders, New Home Sales and Richmond Fed Manufacturing Index taking focus ahead of the festive period

Overnight news bulletin from RanSquawk and Bloomberg

  • The few European equity markets still open drift higher as yesterday's record close on Wall Street pushes the Nikkei 225 to 6-year intraday highs
  • China's liquidity squeeze temporarily sated as the PBoC inject CNY 29bln in 7-day reverse repos - prompting short-term funding rates to fall at the fastest rate in two years, however sentiment not sustained as markets disregard the move as a mere gesture into year's end
  • Treasuries steady, with yields across the curve holding near Sept. highs; curves little changed after taper-spurred bear-flattening that pushed to 5/10 and 5/30 spreads to three-month tights.
  • Market close early for Christmas Eve, with futures trading  over at 1pm, cash Treasuries at 2pm
  • Trading in London quiet as storms that lashed southern England yesterday have closed dozens of railway lines, halted ferry sailings and left airports struggling to restore services
  • Boaz Weinstein’s Saba Capital Management LP is headed for its second losing year in a row, hurt in part by a wager that European equities would rise more than high-yield credit, according to four people with knowledge of the hedge-fund firm
  • The web site yesterday experienced a single-day record number of visits and consumers were moved into a queuing system deployed when the website approaches 50k simultaneous users
  • Obama’s staff, in a symbolic move, signed the president up for a health-care plan this past weekend through the District of Columbia exchange, according to a White House spokesman; the president, who receives his health care from the military, enrolled “as a show of support” for the new marketplaces
  • Sovereign yields mostly higher. EU peripheral spreads tighten. Asian and European stocks gain, and U.S. equity index futures rise. WTI crude and copper rise, gold little changed

Asian Headlines

The PBoC injected CNY 29bln via 7-day reverse repo; first injection in 3 weeks. The 7-day bond repurchase rate, a key gauge of short-term funding, fell 344 basis points to 5.4%, the steepest decline in more than two years, as liquidity improved.

10yr JGBs moved marginally higher overnight by 7 ticks to 143.93, supported by reports that Japan is to cut its bond issuance to JPY 155.1trl in fiscal 2014. The Nikkei 225 initially outperformed and climbed above the 16000 level for the first time since 2007. However, the Nikkei 225 then pared the majority of its gains, finishing with gains of 0.1% at 15889.33 amid profit taking heading into the close in Japan.

EU & UK Headlines

French GDP (Q3 F) Q/Q -0.1% vs. Exp. -0.1% (Prev. -0.1%)
French GDP (Q3 F) Y/Y 0.2% vs. Exp. 0.2% (Prev. 0.2%)
Barclays pan-Euro agg month-end extensions: +0.03y
Barclays Sterling month-end extensions:+0.06y
Europe Closed, UK Early Closure.

US Headlines

Fed's Fisher (non-voter, hawk) said he argued in favour of a USD 20bln taper at last FOMC meeting says market could have absorbed that scale of reduction. (Fox Business)

Shoppertrak says US retail sales have fallen 2.1% for the weekend of December 20-22. (Newswires)

Barclays US Tsys month-end extensions:+0.07y

US Early Closure.


The FTSE and CAC40 drift higher, as positive equity sentiment carries across from the Wall Street and Tokyo sessions, with the US growth picture continuing to climb after the well-received Fed taper and strong US growth numbers. BSkyB top the FTSE-100 this morning after the Co. disclose their HD service added 107,000 subscribers during Q1, with over a third of customers now using the triple play offering of TV, broadband and telephone, according to the Daily Mail. Elsewhere, ARM Holdings pull back from yesterday's Apple-inspired rally, to head into the early close down just under 1.5%.


After a printing a Nikkei-inspired high at 104.41 in Tokyo trade, USD/JPY pulled back from the highs alongside the Japanese index, as Asia-Pacific assets came under mild profit-taking into their respective closes. Elsewhere, there is little to report, with chatter of stops in EUR/USD below 1.3670, with little in the way of bids until the 1.3650 mark.Meanwhile in Turkey, TRY is seeing some strength following comments from the Turkish central bank governor saying the bank is to sell a minimum of USD 450mln in regular forex auctions every day until year-end.


After residing below USD 1,200/oz for the entirety of the Asia-Pacific session, spot gold managed to briefly push above the handle mid-morning in Europe, however yesterday's highs at USD 1,206/oz came under no threat, as prices declined below USD 1,200/oz well ahead of the US crossover. Energy trading remains muted, with Brent being somewhat supported by the continued refinery closures in France (the strike at 3 refineries has now entered the 12th day), and the ongoing conflict in South Sudan, which has cut 45,000bpd from the country's oil output.


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