30 Nov 2012 – “ What's Up? ” (4 Non Blondes, 1992)
Europe rather direction-less on its own.
Equities still rather firmer than not; with Bonds just the same. Macro data
generally rather bleak, although expectations have been put so low lately that
anything about palatable will do. Peeking over the Pond to see whether Fiscal
Cliff discussions could scuttle things. Here late valuations are such that
numbers should be really good to get things going. So: Drifting. Chatting.
Checking.
"What's Up?" (Bunds 1,38% +1;
Spain 5,3% -2; Stoxx 2580 unch; EUR 1,301 +30)
---
Fiscal
Ping-Pong, Part III yesterday evening. Nice hiccups (+0.6%, -0.5%, +0.3%,-0.5%,
+0.4%, +0.25%, -0.4%, +0.3% to close up a quarter in INDU. Jumpy but barely
ever negative). Dow has retaken its 200d average, the S&P is back over its
100d and targeting the 50, while the NASDAQ is doing just the same. Bah. More
to come. Less unsettling than it was 2 weeks ago.
Asia closing the week in decent manner, especially for
late closers. Even China
made it into positive territory, after trading yet new lows, especially at
open.
German
Retail Sales disappointing at -2.8% MoM (fcst -0.4% after +1.5%, revised down
one point to +0.5%), -0.8% after -3.4% YoY. Not exactly thrilling. French
Consumer spending as expected at -0.2% MoM / -0.5% YoY. French PPI better at
+0.5% (fcst +0.2% after rev. +0.4%) / +2.9% unch YoY. Spanish CPI dipping to 3%
(fcst +3.4% after 3.5%), bargaining power reduced with 25%-plus unemployed.
Talking of which, Italian unemployment worse than expected and rising to 11.1%
in Oct (fcst 10.9% after 10.8%). All in all, not exactly thrilling, but
seemingly not the worry of the moment. Draghi on the ticker seeing a recovery
in H2/2013. So, just a question of time and patience… And doing the right
things. Parliamentary debate in Germany
on the Greek aid allowing everyone to express a) doubts and b) solidarity
nevertheless. Sign it off, be patient. The next package will come soon enough… Not
exactly thrilling.
Bit
of a wobbly start, trying to find common ground between FC, nothing burning in Europe, a better close, the EUR trading above 1.30 and
the above-mentioned not exactly thrilling day-to-day reality… So best is to
stay close to home. Half an hour into the cash session, Hard Core EGBs were
about 1bp softer (1.38% in Bunds, 1.63% in Treasuries), the Soft Core a tick
tighter with France hitting a new 2.03% low in 10 YRS. Periphery split -/+ 1
with Italy at 4.55% and Spanish 10s at 5.33%.
Credit
unchanged. Equities up a quarter from close, knowing that with all the hiccups
the US
indices closed where they stood at European COB.
Oil
down 0.5%, Gold up a quarter and Copper flat at 360. EUR 1.302 (from 1.298).
Quote
of the Day by Super Mario, asserting that the Crisis has shown that “We were living in a Fairy World”. Cute
way of spelling it out. Duh!
EZ
Unemployment hitting the expected historic high of 11.7% (up from 11.6%). EZ
CPI a brighter spot, as underlying the ECB pitch that it eventually would get
lower, falling to +2.2% (fcst 2.4% after 2.5%). As for Spain, at some
point prices must fall when there are so many unemployed. Sadly makes sense.
No
supply today. Yesterday’s (totally overpriced) Italian auction issues under
water at 3.42% and 4.55% (from 3.23% and 4.45% average auction yields and
closes on Wednesday evening at 3.385% and 4.585%). Not exactly stellar.
Talking
of which, Spain
drifted further wider during the morning from yesterday’s outwordly yield lows
of 2.55% in 2s and 5.15% in 10s, widening to 2.85% and 5.38%, back to the 400
to Bund mark.
France doing itself and its spread a pleasure by announcing
an OAT auction of a mere EUR 4bn next Thursday, and with no 10 YRS (Oct 2018,
Oct 2019 and Oct 2027). The last auction was for a combined EUR 7.5bn size, of
which EUR 4.4bn 10s (next to off-the-run 7 YRS and 2035s).
Sluggish
Friday sideways trading. Everything about unchanged.
Bunds
1,37% (unch), OBLs 0,40% (unch) and BKOs 0,010% (+0,5). UST 1,62% (-1).
Spanish
2s at 2,85% (+9), 10s at 5,38% (+6). 2-10 YRS spread 252bp (-4). Spain about 20bp wider from Thursday noon.
Italian
2s at 1,80% (+4), 10s at 4,53% (-3). 2-10 YRS spread 273bp (-7).
Equities
some 0.2% firmer. Credit unchanged.
EUR
1.301 and Commodities by and large unchanged.
Big YAWN! Will need to wait for US figures to get things moving, or not, or for
Fiscal Ping-Pong, round 4.
Greek
rescue vote in Germany Parliament going through, but with Merkel falling short of a coalition majority.
Then again, well-orchestrated, not a surprise.
US figures showing Personal Income
stagnating (0%, fcst +0.2% after +0.4%) and Spending diminishing (-0.2%, fcst
flat after +0.4%, rev. +0.3%) but with no immediate reaction in an amorphous
market.
Milwaukee NAPM up, but under forecast (45.5
after 43.3) and finally the Chicago PM about in line at 50.4 (50.5 after 49.9).
By and large flat US cash open. Amorphous? What’s up? What’s going on? Nada.
Month end. Waiting for something to happen –
or not. Trying to avoid any FCDRE (Fiscal
Cliff Discussion Risk Event)…
Spanish bonds eventually tightening back as
nothing else happens.
Falling asleep into the close, opening an
eye to hit F9…
Bunds closed at 1,38% (+1), OBLs at 0,40%
(unch) and BKOs 0,007% (+0,2). UST at 1,61% (-2) COB. Ah! Movement! 1 tick! Soft
Core closing near record lows (give or take one bp), but not spot on. Good
week, though.
Spain back on track on an after-thought, recouping
today’s soft patch and yesterday’s losses and closing down 30bp on the week.
B+392. Note that the recovery in Periphery was on the longer end only with 2
YRS softer.
Spanish 2s at 2,83% (+7), 10s at 5,30% (-2).
2-10 YRS spread 247bp (-9).
Italian 2s at 1,80% (+4), 10s at 4,49%
(-7). 2-10 YRS spread 269bp (-11).
Equities flat flat flat.
EUR closing juuuuuust above 1.30, for
the principle. Commodities flat. Gold suffering, again, an attack to the downside.
Take-away: Quiet. Europe rather
direction-less on its own. Equities still rather firmer than not; with Bonds
just the same. Macro data generally rather bleak, although expectations have
been put so low lately that anything about palatable will do. Peeking over the
Pond to see whether Fiscal Cliff discussions could scuttle things. Here late
valuations are such that numbers should be really good to get things going. So:
Drifting. Chatting. Checking.
Outlook: Fiscal Cliff Discussion Risk Event
still live. Greek maths on buy-back. Spain maths on its budget. Italian maths…
French... Bah… Seem to be drifting. Bond strength with the latest levels in equities
somehow puzzling. Growth slow-down versus H2/2013 Outlook. Risk levels probably
too low. Not much on the fundamental side in the next 2 days. Maybe waiting for an
ECB-gesture (which shouldn’t come). Cyprus-bailout for 03 Dec.
European 50 & 100d averages: EStoxx
2509/2460, DAX 7271/7106, CAC 3447/3419, MIB 15552/15118, IBEX 7827/7509.
US 50, 100 & 200d averages: INDU
13209/13135/12995, S&P 1422/1409/1384, NASDAQ 3027/3018/2987 with AAPL at
616/625/600.
EUR: 50d 1.291, 100d 1.270 & 200d 1.279.
Fibo retracement (of May 2011 1.494 & Jul 2012 1.204 down-leg) at 1.273&
1.315, then 1.349 (50%).Jul 2012 to Sep rebound levels: 1.231 – 1.247 – 1.261 –
1.274 – 1.291 -1.317 .
New Issues closing the week with Telenor
selling EUR 600m 12 YRS at MS +83 and Spanish government-guaranteed ICO trying
to jump on yesterday’s FADE band-wagon, but closing a minimum EUR 500m increase
of an outstanding Jul 2017 at Spain +60 (about MS +405) at that minimum amount.
This was quite an active week of over EUR
27bn in 30 New Issues (including a EUR 7bn 1-year deal for the EFSF).
Don’t miss the Shuffle Rewind over the weekend.
Closing
levels:
10 YRS Yields: Germany 1,38% (+1);
Luxembourg 1,49% (unch); Netherlands 1,61% (+1); Finland 1,62% (+1); Swaps 1,67%
(-1); EU 1,70% (unch), Austria 1,74% (unch); EIB 1,86% (-1); EFSF 1,99% (unch);
France 2,04% (unch); Belgium 2,16% (-1); Italy 4,49% (-7); Spain 5,30% (-2).
10 YRS Spreads: Luxembourg 11bp (-1);
Netherlands 23bp (unch); Finland 24bp (unch); Swaps 29bp (-2); EU 32bp (-1);
Austria 36bp (-1); EIB 48bp (-2); EFSF 61bp (-1); France 66bp (-1); Belgium
78bp (-2); Italy 311bp (-8); Spain 392bp (-3).
EUR swap curve 2-5 YRS 45bp (unch); 5-10
YRS 81bp (unch) 10-30 YRS 63bp (unch).
2 YRS German BKOs closed 0,007% (+0,2) and
5 YRS OBLs 0,40% (unch).
Main +1 to 123 (0,8% wider); Financials +1
to 160 (0,6% wider); Cross +3 to 497 (0,6% wider).
Stoxx Futures at 2580 / +0,0% (from 2579)
with S&P minis at 1412 (-0,3% from 1416, at European close).
VIX index at 15,8 after 15,2 yesterday same
time.
Oil 88,5/110,9 (WTI/Brent) from 88,2/110,9
(+0,4%/+0,1%). Gold at 1712 after 1727 (-0,8%). Copper at 361 from 360 (+0,3%).
CRB at EU COB 299,0 from 297,0 (+0,7%).
Another fall after yesterday, after nearly
3 weeks of continuous rise for the BDIY, down 1% to fixing at 1086. Target
1162-high, seen in July, post-Chinese New Year slide.
EUR 1,301 from 1,298
Greek guesstimate:
Greek bonds had the 2023s ticking down 25 to 16.00%, having ended yesterday
unchanged, with the 2042s remaining unchanged today at 12.50%. So give us those
buy-back prices now!
All levels COB 17:30 CET
Fast-forward
Macro and Events:
Hmm… Only bits and pieces on the macro
front. Industrial output in Spain on Wed. Factory Orders in Germany on Thu. Fri
NFP in the US.
Thursday ECB& BOE (FED on 12 Dec)
The start of next week will be flushed with
bills (Belgium, EFSF, France, Germany, Netherlands) and see additional EUR 4bn
German 2 YRS on Wednesday. Spain will hold an auction in 3, 7 and (short) 10
YRS on Wednesday as well (as Thursday will be closed), while France will supply
its monthly OAT auction on Thursday, albeit for only up to EUR 4bn and without
10 YRS (2018, 2019 & 2027).
EC:
Mon Final MfG PMI; Tue PPI fcst +2.5% after +2.7% YoY; Wed Final Comp PMI,
Retail Sales; Thu EZ GDP and ECB
GE: Mon Final MfG PMI; Wed Final Serv PMI;
Thu Factory Orders last -3.3 MoM, Friday Industrial Production last -1.8%
MoM/-1.2% YoY
FR: Monday Final MfG PMI; Wed Final Serv
PMI; Thu Q3 unemployment
Italy: Mon Budget Balance, Car Sales; Wed
Final Serv PMI
Spain: Tue Unemployment; Wed Industrial
Output (last 7% wda).
US: Mon Final PMI, MfG ISM &
Construction Spending; Tue ISM NY; Wed Factory Orders, Productivity and Labour
Costs; Thu Claims; Fri NFP
Click
link under title or below for today’s musical support:
And
I am feeling a little peculiar/ And so I wake in the morning / And I step
outside / And I take a deep breath and I get real high / And I scream at the
top of my lungs
What's
going on?
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