04 Dec 2012 – “ 11 O'Clock Tick Tock ” (U2, 1980)
Lather. Rinse. Repeat. Europe doing about
fine on its own and with an urge to test higher risk levels, in absence of
negative news. US more fickle on FCDRE. If this goes on until year-end… If it
wasn’t for a bit of FCDRE… Tick. By. Tick. Movements. Equities high. Soft Core
closing on historic lows.
"11 O’Clock Tick Tock " (Bunds
1,39% -2; Spain 5,23% -1; Stoxx 2587 +0,3%; EUR 1,308 +20)
---
Just more of the same overnight. US had a
weaker close, this time, on FCDRE, but in measured manner (-0.4%), taking us
back to the levels where the index reshuffling started on Friday and then down
0.3% in the close.
Asian risk trailed the US, down a quarter with, tataa, the notable
exception of China,
closing up 1%, but after having hit new lows (Shanghai down to 1950, before
rebounding 1.5% in the afternoon session).
The RBA graced the world with a quarter
point cut to 3% (its post-Lehman low) on, duh!,
a weaker global outlook.
In for another probably quieter session
until the US
come in: Open about in line with yesterday. Equities flat to the tick compared
to Monday’s close. EGBs again a tick better bid with Bunds paring yesterday’s
afternoon softer patch and quoted 1.39% (-2) with UST 1.61% (-2). Hard Core in
line. Soft Core 1bp firmer and Periphery flat to a tick better. Curves
unchanged. Credit 1-2 ticks wider.
EUR unchanged. Commodities about 0.5% off
with Gold back down above the 1700-handle.
As for yesterday’s PMI data, Spanish
unemployment numbers were less bleak than expected +90k with 74k added (from
prior +128k).
Again bills on today’s menu: EUR 1bn of
Belgian bills in 3m at -0.029% and 6m at -0.01% (from -0.004% and +0.021%) and the
EFSF for EUR 1.4bn 3m at -0.047% (from -0.029%). Note that Belgian bills come
now inside France in 3m (yesterday -0.022% and -0.008%), but then again, France
is a weekly visitor…
Not a huge week in terms of govie supply:
The Spanish auction (exceptionally held tomorrow with Thursday a holiday in
Spain) will be for up to EUR 4.5bn in 3.75% Oct 2015 (COB 3.415%),4.60% Jul 2019
(COB 4.610%) and the “on-the-run” 10 YRS 5.85% Jan 2022 (COB 5.235%). We’ll have
as well additional EUR 4bn in Schätze (COB 0.015%).
Thursday will see a rather modestly-sized
EUR 4bn French auction for the 4.25% Oct 2018, 3.75% Oct 2019 and 2.75% Oct 2027
OATs.
Again some good and diversified New Issues
supply with Rio Tinto (in longer duration than Xstrata 2 weeks ago) raising EUR
750m May 2020 at MS+80, next to EUR 500m 12 YRS at MS +110 (and GBP 500m 2029
at G +165), Deutsche Post with another 2-trancher of EUR 300m 8 YRS at MS +60
and EUR 700m 12 YRS at MS +100. Further German issuers with Metro EUR 500m May 2018 at MS +140 (Not bad for a
BBB- rating) and, on the other end of the credit spectrum, Land Hessen with a
EUR 350m increase of a June 2020 line at MS +3. Unicredit raised with EUR 750m
5 YRS senior debt at MS +255. Finally, there was a late-closing deal yesterday
for a Spnaish region with Junta de Castilla y Leon closing EUR 200m 2 YRS at a
yield of 5.500% (about MS +508).
EZ PPI etching up 0.1% MoM in Oct (fcst
flat after +0.2%), +2.6% YoY (fcst +2.5% after +2.7%).
No follow-up weakness, hence some ROn. Equities climbing 0.75% in a quiet
market. EGBs moving back to unchanged. Periphery tightening a tick or two.
Credit back a tick or two tighter. Bit of an upside test in the EUR with a
1.3085 high. Commodities flattish to a tick firmer.
Greek rocket stalling at yesterday’s
prices.
It’s all a story of a tick - or two. Tick. Two. Tick. Tock. Already 11’ o clock???
Lunchtime levels, as mentioned.
Bunds 1,41% (unch), OBLs 0,43% (unch), BKOs
0,015% (-0,7). UST 1,63% (unch).
Spanish 2s 2,81% (+2), 10s 5,23% (-1). 2-10
YRS spread 242bp (-2).
Italian 2s 1,76% (-1), 10s at 4,41% (-3).
2-10 YRS spread 265bp (-3).
Banking Supervision talks once more put on
the longue table. SMP obviously nothing for immediate use. Lack of “clear and immediate danger” obviously a
brake on going forward. Tick. Tick. Tock.
Tock. To be revisited on 12 Dec, but realistically a 2013 subject (if we make it past the Mayan End of The
World)(11 o’clock).
Yet again Franco-German divergences…
And Juncker, who wants to ditch his
Head of Eurogroup job… Too bad. Someone has to do it. French and Germans are too oppressing
in that position and it would be nice to have someone more charismatic than HvR,
as the uninteresting consensus choice par
excellence, and someone that does NOT come from the South.
What can we get out of Finland (although
too stern) and best of all out of the Netherlands? Too bad Wim Duisenberg is
gone, thinking of it.
No US figures to kick-start the
afternoon, but with a bit of softness spreading after lunch. US cash open close
to home, leaving European Risk outperforming by about 0.5% to the US.
UST back to 1.61% (-2), as most EGBs,
including the Periphery.
EUR juuuuuuust
made it slightly over the 31-hande. To have it flashed. Matter of principle.
Gold hit below the 17-handle (-1%), as is
Oil at American open (-1.5%). On EUR
strength???
With US equities eventually soon in
slightly positive territory, markets chilled out rapidly (US flat, Europe +0.5%. Bonds 1 to 2bp tighter).
Tick.
Tock.
Sole data set of the day with the NY ISM at
52.5 after 45.9 (Sandy-ed) in Oct.
Yawning the rest of the afternoon with
ticking sounds in my head.
Aaaand….
finally hitting F9 for yet another rather quiet session (to say the least).
Bunds and EGBs all a tick firmer. Soft Core
closing on historic lows.
European equities about a quarter positive.
Credit about flat. EUR a tick firmer. Oil and Gold 1% softer.
Spain not moving much ahead of tomorrow’s auction.
Greek bonds 0.25% lower in price than yesterday.
Bunds closed at 1,39% (-2), OBLs at 0,42%
(-2) and BKOs 0,015% (-0,7). UST at 1,60% (-3) COB.
Spanish 2s at 2,82% (+3), 10s at 5,23% (-1).
2-10 YRS spread 241bp (-3).
Italian 2s at 1,76% (-1), 10s at 4,42%
(-2). 2-10 YRS spread 266bp (-2).
Take-away: Lather. Rinse. Repeat. Europe
doing about fine on its own and with an urge to test higher risk levels, in
absence of negative news. US more fickle on FCDRE. If this goes on until
year-end…
Outlook: More of the same. Lather, Rinse,
Repeat. Stand still. Fiscal Cliff Discussion Risk Event still live. Spain maths on
budget. Italian maths, French… Bah… etc. etc. etc. Need to see whether Final
Service PMIs confirm yesterday picture (Rebound from lowest levels : Half
full glass, rebound ; half empty, low base). Spanish auction at late
tightest levels.
EZ Composite 45.8 and Services 45.7. EZ
Retail Sales fcst -0.2% MoM. German Services PMI 48, France 46.1. Final US Productivity
for Q3 (fcst 2.8% after 1.9%), ADP +125k after 158k, Factory Orders for Oct
(fcst flat after +4.8%), Non-Mfg Composite ISM (fcst +53.5 after 54.2).
European 50 & 100d averages: EStoxx
2510/2466, DAX 7270/7123, CAC 3449/3426, MIB 15548/15162, IBEX 7816/7536.
US 50, 100 & 200d averages: INDU
13186/13141/12996, S&P 1421/1410/1385, NASDAQ 3020/3020/2987 with AAPL at
611/625/601.
EUR: 50d 1.291, 100d 1.271& 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%).
Closing
levels:
10 YRS Yields: Germany 1,39% (-2);
Luxembourg 1,49% (-2); Netherlands 1,60% (-3); Finland 1,63% (-2); Swaps 1,68%
(-2); EU 1,69% (-3), Austria 1,76% (unch); EIB 1,86% (-2); EFSF 1,98% (-3);
France 2,03% (-2); Belgium 2,15% (-1); Italy 4,42% (-2); Spain 5,23% (-1).
10 YRS Spreads: Luxembourg 10bp (unch);
Netherlands 21bp (-1); Finland 24bp (unch); Swaps 29bp (unch); EU 30bp (-1);
Austria 37bp (+2); EIB 47bp (unch); EFSF 59bp (-1); France 64bp (unch); Belgium
76bp (+1); Italy 303bp (unch); Spain 384bp (+1).
EUR swap curve 2-5 YRS 46bp (unch); 5-10
YRS 82bp (unch) 10-30 YRS 63bp (unch).
2 YRS German BKOs closed 0,015% (-0,7) and
5 YRS OBLs 0,42% (-2).
Main unchanged at 120; Financials -2 to 153
(-1,3% tighter); Cross +1 to 487 (0,2% wider).
Stoxx Futures at 2587 / +0,3% (from 2580)
with S&P minis at 1405 (-0,6% from 1414, at European close).
VIX index at 16,9 after 16,3 yesterday same
time.
Oil 88,4/109,6 (WTI/Brent) from 89,1/111,0
(-0,8%/-1,2%). Gold at 1696 after 1715 (-1,1%). Copper at 365 from 363 (+0,6%).
CRB at EU COB 300,0 from 299,0 (+0,3%).
BDIY accelerating down again: today 1054
after 1077 (-2.1%). Xmas shipping already
over?
EUR 1,308 from 1,306
Greek guesstimate:
Greek bonds balancing out at 38.75% (14.83% yield) after 39% (14.75% yield) for
the 2023s and 30.25% (yield 11.92%) after 30.75% (11.77%) for 2042s. Ticking a
little lower. Hey, they’re still all-time
high... Euh... Somehow. Obviously, that is a post-PSI high…
All levels COB 17:30 CET
Fast-forward
Macro and Events:
Hmm…Only bits and pieces on the macro
front.Service PMIs on Wednesday Industrial output in Spain on Wed. Factory
Orders in Germany on Thu. Fri NFP in the US.
Thursday ECB& BOE (FED on 12 Dec)
Additional EUR 4bn German 2 YRS on
Wednesday. Spain will hold an auction of up to EUR 4.5bn 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: Wed Final Comp PMI, Retail Sales; Thu
EZ GDP and ECB
GE: Wed Final Serv PMI; Thu Factory Orders
last -3.3 MoM, Friday Industrial Production last -1.8% MoM/-1.2% YoY
FR: Wed Final Serv PMI; Thu Q3 unemployment
Italy: Wed Final Serv PMI
Spain: Wed Industrial Output (last 7% wda).
US: Wed Factory Orders, Productivity and
Labour Costs; Thu Claims; Fri NFP
Click
link under title or below for today’s musical support:
We
thought that we had the answers
It
was the questions we had wrong
(Man,
I can’t remember the last time I had seen The Edge’s hairline before screening
this clip…)(And that Gibson Explorer looks cool, too. After all…)
Music Link
Music Link
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