16 Nov 2012 – “That's the Way (I Like It) ” (KC and the Sunshine
Band, 1975)
Mostly boring. Several inconclusive downside
tests in European equities. Static bonds, unwilling to tighten further. More US
equity weakness, more downside. Way is shown by US equity dump. Periphery? What
Periphery? What problem? Credit, EGBs, most commodities just watching. Dismal
close.
"That's the Way (I Like It)"
(Bunds 1,32% -2; Spain 5,86% -3; Stoxx 2429 -1,2%; EUR 1,27 -90)
---
As somehow to be expected, the US markets
closed down, as the rally rebound during the EU afternoon session
just fizzled out and with the last trading hour pushing indices back
into negative territory. Again a
comfortable Copy-Paste.
Aside the comfort, US equities just closed
where left in Europe, although that failed rebound is certainly visible.
Asia rather on the soft side to end the
week, except Japan, ripping once more 2% higher. Shanghai still hovering just
above its 2.004-low (26Sep).
Nothing really exciting overnight. Lagarde
reference to the Greek solutions not done “until the Fat Lady sings” a bit of a
riddle. Angie? That would be mean.
No real data to start the end of the week.
European Oct car registrations still sliding (-4.8% after -10.8%), down 6.9%
YTD. Last positive number was in Sep 2011.
Seriously sideways open. All unchanged to a
tick or two.
Bunds stuck at 1.34%, USTs 1.59%. German
curve or other EGBs unchanged.
Italy & Spain some 3bp better.
Equities unchanged, Credit unchanged.
Note EUR back to 1.275 and Brent down 2.5%
overnight and back to the 108-handle. Yawn! Friday.
Equities drifting lower, having failed to
break-out on the upside. No visible trigger, but good enough to re-test last
Friday’s sell-off lows in EStoxx and to definitively print new lows for CAC and
DAX (optically below 7000). EStoxx back on Sep 28 and Oct 10 lows.
Equities playing solo. Bunds duly ticked up
a couple of ticks, and printed 1.33%, as the DAX slid to its lows- before
giving back and going back to slip.
No government auctions. Monday bills only
(France, Netherlands, EFSF); Tuesday will see 12 and 18m Spanish bills, 10 YRS
Bund increase on Wed next to Portuguese bills; 3, 5 & 9 YRS BONOs on
Thursday. Light week. All eyes on Spain.
EZ Sep trade surplus was EUR 11.3bn (fcst
EUR 9.5bn after EUR 9.9bn), with exports -1.1% at EUR 158.5bn, but imports down
even more -2.7% to EUR 147.2bn. Highest surplus ever since EUR introduction.
Noyer, Weidman, Draghi & Coeuré
yesterday, EU SPOX all on the ticker at some time, but nothing neither new nor
even remotely as intriguing as Lagarde’s Fat Lady.
Midday levels uninspiring with equities
sluggishly rebounding twice off lows before being suddenly bid up into the void
to unchanged levels shortly before 13 CET. Up about 0.8%-1% on no news within
one hour. Algos, I here you coming… Credit
flat.
Bunds 1,35% (+1), OBLs 0,36% (unch), BKOs
-0,039% (+0,3). UST 1,59% (unch).
Spanish 2s 3,22% (unch), 10s at 5,87% (-2).
Spanish 2-10s 265bp (-1).
Italian 2s 2,07% (unch), 10s at 4,87% (-2).
Italian 2-10s 280bp (-2).
Commodities down 0.5% across the board,
Brent 108.2 down 2.5%, morning levels. EUR 1.274.
Waiting for US input with no early
afternoon figures on the plate. Had another 0.50%-0.75% lunch-time sell-off and
rebound to pass time – and move back to Square 1.
And then some more sideways movements. Yaaaaaaaaaaawn!
Plenty
of time to read The Economist’s take on the French “time-bomb”. Can’t even
understand the uproar here in France, as the articles themselves are much more
nuanced than the front page, of which, it must be said, the fused baguettes on the picture
just look delicious. Content is very matter-of-fact. If front page headlines
were there for anything else than causing a steer and make people buy, it would
be known…
In
any case, no impact other than the French curve tightening in 1 bp.
US figures a miss, but who seems to care,
with Oct Industrial Production down 0.4% (fcst was +0.2% after +0.4%, rev.
0.2%). Manufacturing Output down 0.9%. 1% loss blamed on Sandy Miss plus prior revision.
Capacity Utilization at 77.8% (fcst was unchanged 78.3%). No immediate impact. Subsequent
flat US cash open. UST unchanged 1.59%.
On second thought, US equities sliding
towards yesterday’s lows, checking if these were really the lows, which they
weren’t, and dragging European Risk along.
50% INDU retracement of the Oct 2011 – Oct 2012
at 12.447. S&P at 1317. NASDAQ 2819 (tested at 16:05 and broken 17:25).
Shouldn’t miss that opportunity to revisit
these levels.
Wow. Seemingly a pure equity play. Europe
closing LOD. Sh** close.
EGBs didn’t move most of the day and definitively
not in the afternoon. Had to witness the closing dump to move Bunds a further
basis point tighter.
Bunds closed at 1,32% (-2), OBLs at 0,34%
(-2) and BKOs -0,052% (-1,1) with UST at 1,56% (-3).
Spanish 2s at 3,22% (unch), 10s at 5,86% (-3).
Spanish 2-10s 264bp (-2).
Italian 2s at 2,06% (-1), 10s at 4,87%
(-2). Italian 2-10s 281bp (-1).
Commodity shake-out rather limited.
Take-away: Mostly boring. Several inconclusive
downside tests in European equities. Static bonds, unwilling to tighten
further. More US equity weakness, more downside. Way is shown by US equity
dump. Periphery? What Periphery? What problem? Credit, EGBs, most commodities
just watching. Dismal close.
Outlook for Monday / Next Week: More of the
same? No real European data. Need to check the US close. Massive post-EU close nearly 1% spike. Fiscal Cliff. Spailout & Grexit… Gloomy.
European 50d & 100d: EStoxx 2516/2434
(50d/100d), DAX 7290/7030, CAC 3457/3390, MIB 15708/14977, IBEX 7863/7418.
US 100d& 200d for INDU 13122/12993, SPX
1404/1382 and NASDAQ 3015/2985, as Apple-challenged (200d 595).
EUR: 100d 1.265 & 200d 1.281. Fibo
retracement (of May 2011 1.494 & Jul 2012 1.204 down-leg) at 1.273& 1.315. Jul 2012 to Sep
rebound levels: 1.231 – 1.247 – 1.261
– 1.274 – 1.291.
Closing a rather uninspiring New Issues
week with EUR 500m 12 YRS Big Mac’s at MS+53. I’m lovin’ it. Not right on time lows in 12 YRS swaps (June 2012
still 12bp tighter), but with tighter credit spreads, this is cheap money.
French real-estate Société Foncière Lyonnaise finally delivering EUR 500m 5 YRS
at MS +275, having had to pull that same deal at MS +250 on Sep 11.
Don’t miss the Shuffle Rewind over
the weekend.
Closing
levels:
10 YRS Yields: Germany 1,32% (-2);
Luxembourg 1,47% (+0); Netherlands 1,58% (-3); Finland 1,60% (-2); Swaps 1,66%
(-1); EU 1,70% (-1), Austria 1,77% (unch); EIB 1,86% (-1); EFSF 1,98% (-1);
France 2,07% (-1); Belgium 2,25% (unch); Italy 4,87% (-2); Spain 5,86% (-3).
10 YRS Spreads: Luxembourg 15bp (+2);
Netherlands 26bp (-1); Finland 28bp (unch); Swaps 34bp (+1); EU 38bp (+1);
Austria 45bp (+2); EIB 54bp (+1); EFSF 66bp (+1); France 75bp (+1); Belgium
93bp (+2); Italy 355bp (unch); Spain 454bp (-1).
EUR swap curve 2-5 YRS 46bp (unch); 5-10
YRS 81bp (-1,0) 10-30 YRS 61bp (+1,0).
2 YRS German BKOs closed -0,052% (-1,1),
Dec 2012 -0.41% and 5 YRS OBLs 0,34% (-2).
Main +3 to 139 (2,2% wider); Financials +2
to 188 (1,1% wider); Cross +11 to 572 (2,0% wider).
Stoxx Futures at 2429 / -1,2% (from 2459)
with S&P minis at 1344 (-0,4% from 1349, at European close).
VIX index at 18,3 after 18,0 yesterday same
time.
Oil 86,9/108,2 (WTI/Brent) from 86,1/110,8
(+0,9%/-2,3%). Gold at 1711 after 1716 (-0,3%). Copper at 343 from 346 (-0,9%).
CRB at EU COB 293,0 from 294,0 (-0,3%).
BDIY, up 12 to 1036 (+1.2%)
Intermediate 2012 highs after Chinese New
Year and a 10-year low at 647 early Feb were 1165 early May, before dipping to
872 in June, rising back to 1162, retesting lows at 661 mid-Sep, re-testing
highs at 1109 before sliding back to 916 in the last down-leg.
EUR 1,270 from 1,279
Greek guesstimate:
Greek bonds back 25 tighter to 17.25% for 2023s and 14.50% for 2042s.
All levels COB 17:30 CET
Fast-forward
Macro and Events:
Be warned that there isn’t much in terms of
European data until next week’s Thursday, which will be PMI day. Wednesday
crowded data dump ahead of Thu 22 Thanksgiving holiday. Black Friday. EU FM
meeting on Monday evening and Eurogroup on Tuesday to settle Greece… or
probably not.
Light week auction week: Tue 12 & 18m
Spanish bills; Wed 10 YRS Bund increase and Portuguese bills; Thu 2015 2017
& 2021 BONOs. All eyes on Spain, thus.
EZ: Mon 19 Construction; Thu 22 Comp / Manu
/ Services PMI last 45.7, fcst 45.5 after 45.4 and 46 unch, EZ Consumer Conf
fcst -25.5 after -25.7
GE: Tue PPI; Thu 22 PMI Manu last 46
Services 48.4; Fri 23 Final GDP, IFO Nov Biz Climate last 100, Current last
107.3, Expectations last 93.2
FR: Thu 22 PMI Manu last 43.7, Services
last 44.6; Fri 23 Biz Conf last 85
Italy: Mon 19 Sep Indu Orders last +0.7%
MoM & Sales last +2.9% MoM; Fri 23 Retail Sales last +0.% MoM
Spain: Wed 21 Trade; Fri 23 PPI
US: Mon 19 Home Sales; Tue 20
Housing Starts and Permits; Wed 21 PMI, Claims, U Michigan, Leading Indicators.
Wed 22 Thanksgiving
CH: Thu HSBC PMI
Click
link under title or below for today’s musical support:
Well,
willingly or not. THAT seems to be the way…Aha. Aha.
And
it did allow me to have a “Royal Flush” with songs containing “Way” in the
title.
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