07 Dec 2012 – “ Bruttosozialprodukt
” (Geier Sturzflug, 1982)
Hmmm… Need to find another way to kill time
until Year End. Morning highs, lunch time lows and then trailing the US. EGBs
on the stronger side with augurs seeing a weakening Germany and calls for lower
rates putting the EUR under pressure. Ok, Germans: now work! Somebody has to
pay the bills!
"Bruttosozialprodukt
" (Bunds 1,3% +1; Spain 5,45% -1; Stoxx 2597 -0,3%; EUR 1,295 -20)
---
The US performance after European close
was fairly uneventful and essentially moving sideways below HOD for most of the
session. As nothing was dropping, the 0.3% uptick back to HOD in the last 30
minutes then finalized the day.
Asia mostly flat with exception of Oz, up a
small 1% and especially China still ripping, shaking off the last weeks’
depressed mood, closing about 2% higher, extending the gains from Tuesday’s
yearlong low to 7% - and incidentally riiiiiiight
back to the 50d average.
Not much more in overnight news. Monti’s
government made it through the latest confidence vote in the lower house, but Bunga Bunga is back in da House.
If the ECB yesterday sounded only cautious
to gloomy, it’s because they hadn’t yet seen the Bundesbank forecast, otherwise
they would have been less sanguine (unless they really think that the Periphery
will propel things): 2013 GDP outlook slashed by four to 0.4% from 1.6%,
Q4/2012 to be bleak and GDP expectations lowered to +0.7% from 1%, while saying
that the German economy was still “in good shape” and that employment shouldn’t
be impacted too much. 2014 GDP is seen at 1.9%, subject to resolution of the
debt crisis. Inflation to remain subdued. Well,
if that’s not a reason to plough into equities…
Ending the week with umpteenth, accustomed
slight Risk On. why kick the habit?
Bunds up 1bp to 1.30% (UST +1 to 1.58%).
Hard Core same. Soft Core 1bp firmer, but the Periphery drifting a little wider
with Spanish 2s right at 3% (+5) and 10s just below 5.50% (+3). Italian 2s
still below 2% at 1.94% (+3) and 10s shifting away from 4.50% at 4.60% (+2).
Bunga,
why did you spoil the party?
Equities about unchanged half an hour into
the cash session, but 0.50% lower than opening future quotes.
EUR still drifting lower at 1.294 (that’s
about 200 pips below Wednesday’s highs) and Commodities mostly unchanged with
Gold sluggishly resting on the 1700-handle.
No government supply today; only EUR 4bn 3
and 6m bills on Monday, next to the weekly French auction for EUR 6bn 3,6 an
12m bills.
Spain going ballsy next week with among the bonds to
be issued, next to 3 and off-the-run 5 YRS, a retap of the 4.90% 2040 (6.07% at
COB) announced for next Thursday (with Wednesday’s auctioned paper still about 15bp
under water in the close).
New Issues supply limited to Crédit
Agricole going 2 YRS FRN route for EUR 1.25bn at 3mE +45.
Markets then en route to take a serious nap
before NFP, hoping to then rush into the weekend unharmed. Getting a bit of a
slide in Risk appreciation with Spain still adrift and equities pushing lower
and slightly negative by lunchtime with the German IP not exactly helpful.
German Oct Industrial Production a downer,
but then the Bundesbank said so much this morning, falling 2.6% MoM sa (fcst was 0%
after -1.8%, rev. -1.3%). Sharp drop on YoY nsa wda basis, down -3.7% after
-0.8%.
Greece
final Q3 GDP revised to -6.9% (from -7.2%), the seventeenth negative quarter,
while Portugal’s
was revised a tick lower to -0.9% QoQ (after -1% in Q2) / -3.5% YoY, for an
eighth quarter of contraction.
Midday levels, a witness of fairly
uninspired markets. EGBs +/- 1 bp, rather -1 actually, catching up on
yesterday’s Bund sprint, and with the Soft Core ticking tighter still.
Equities down -0.4%, after having gapped up
about 0.50% in pre-cash trading, to retest yesterday’s new 2012 highs, and then
sliding gradually 1% from there. Credit 1-2 ticks / 1% wider, in line.
Periphery still wobbly and probably okay given the softer tone.
Not soft at all were Hellenic bonds, rising
Icarus-like, to 40.5 (+100) and 31.25 (+75) and bringing yields crashing down
to 14.24% (from 14.75%) and 11.63% (from 11.85%). Buy-back supposed to end
today, but this being a Greek deal…
Bunds 1,30% (+1), OBLs 0,30% (unch), BKOs
-0,065% (-1,4). UST 1,58% (+1).
Spanish 2s at 2,99% (+4), 10s at 5,50% (+4).
2-10 YRS spread 252bp (+1).
Italian 2s at 1,95% (+4), 10s at 4,59%
(+1). 2-10 YRS spread 263bp (-5).
EUR 1.293 in
the tightest of 20-40 range. Commodities unchanged.
Slovak ECB member Makuch revealing that the
rate cut debate had been serious yesterday, as well negative rates discussions.
Separate rumours at the same time spoke of a majority having been in favour.
Add that to weaker German figures and there you go; enough to dip the EUR to
test the 29-figure.
Looks like the “bosses” (Draghi, Coeuré,
Asmussen & Weidman) drowned that rate cut thing. But now, it’s out there…
NFP a flyer with 146k jobs added (fcst 85k
after 171k, albeit revised to 138k). Private Payrolls strong at +147k (fcst 90k
after 184k, even revised up to 189k). Manufacturing remains weak, though, at
-7k (fcst -4 after +13k, rev. +10). Unemployment headline rate now down to 7.7%
(fcst was unchanged at +7.9%). Hourly earnings in line with expectations at
+0.2% MoM / 1.7% YoY (up from 0% / 1.6%). Household employment at -122 after
+410. All is good!
Good for a 0.6% push back up in equities,
slightly above Thursday’s closing levels.
UST sliding a further 4bp to 1.62%. 20
ticks impact on Bund futures, adding 1bp in cash.
US cash open ok at +0.25-0.4%, but not
outrageous either (All lot of good news are already priced in at these levels
and markets want that Fiscal Cliff discussions behind, before getting too
excited), so European Risk rapidly ticked back to closing levels again, leaving
Bunds still hurting a little (with UST still out by 5) and the rest of the EGB
gang test (yet again) new lows. Michigan Confidence a spoiler, too, falling to
74.5 (forecast was a slight correction to 82 from 82.7).
All the more a reason not to get
over-excited.
NFP second thoughts involve Thanksgiving
& Black Friday / weekend hiring, as well as drop-outs on the job seeker
front. Whatever… Best is not to move.
Italian BTPs snapping tighter in the course
of the afternoon with Bunga supporters asking for an “orderly” end to Monti’s
government, interpreted as a (longer) (haggle)
process that might not be immediate.
Good for Spain and especially good for the FR
/ BE pair, propelled yet a little tighter to close the week on record lows.
European equities retesting lunchtime lows nearing
the close (-0.5%), which ends the week at +0.7%.
Credit eventually ticking 2 wider (1.5%).
Apple still shaking its cart.
Hard Core faring about alright (-1), Soft
Core dancing with France at 1.95% in 10s, 0.635% in 5s and 0.030% in 2s.
Belgium nearing the 2%-mark as well.
Bunds closed at 1,30% (+1), OBLs at 0,29%
(-1) and very strong BKOs at -0,080% (-2,9). UST at 1,62% (+5) COB.
Spanish 2s at 2,93% (-2), 10s at 5,45% (-1).
2-10 YRS spread 252bp (+1).
Italian 2s at 1,84% (-7), 10s at 4,53%
(-5). 2-10 YRS spread 269bp (+1).
Greek bonds closing the 2023s at 40.75
(14.15%) and 2042s at 31.0 (11.71%)
EUR eventually balancing out, lacking
follow-up pressure. Commodities trading about flat to yesterday.
Take-away: Hmmm… Need to find another way
to kill time until Year End. Morning highs, lunch time lows and then trailing
the US. EGBs on the stronger side with augurs seeing a weakening Germany and
calls for lower rates putting the EUR under pressure. Ok, Germans: now work!
Somebody has to pay the bills!
Outlook: Same on the menu. Broadly
sideways, unless a shoe drops. If the sun shines, test the upside. Fiscal Cliff
uncertainty remains on the menu. Italy becoming again a wobbly candidate for
some Periphery stress. Need to see if the Greek buy-back will take Greece off
the radars (for a while).
Lot of sentiment data new week with the flash
PMI round on Friday to be scrutinized.
European 50 & 100d averages: EStoxx
2514/2476, DAX 7279/7147, CAC 3457/3437, MIB 15569/15232, IBEX 7813/7575.
US 50, 100 & 200d averages: INDU
13153/13152/12998, S&P 1418/1412/1386, NASDAQ 3009/3023/2988 with AAPL at
602/623/601.
EUR: 50d 1.292, 100d 1.274& 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%).
Don’t miss the Shuffle Rewind over the weekend.
Closing
levels:
10 YRS Yields: Germany 1,30% (+1);
Luxembourg 1,38% (-1); Netherlands 1,52% (-1); Finland 1,55% (+1); EU 1,58%
(-1); Swaps 1,58% (-1), Austria 1,69% (-3); EIB 1,75% (unch); EFSF 1,86% (-1);
France 1,95% (-4); Belgium 2,09% (-3); Italy 4,53% (-5); Spain 5,45% (-1).
10 YRS Spreads: Luxembourg 8bp (-2);
Netherlands 22bp (-2); Finland 25bp (unch); EU 28bp (-2); Swaps 28bp (-2);
Austria 39bp (-4); EIB 45bp (-1); EFSF 56bp (-2); France 65bp (-5); Belgium
79bp (-4); Italy 323bp (-6); Spain 415bp (-2).
EUR swap curve 2-5 YRS 44bp (unch); 5-10
YRS 82bp (+1,0) 10-30 YRS 70bp (+3,0).
2 YRS German BKOs closed -0,080% (-2,9) and
5 YRS OBLs 0,29% (-1).
Main +2 to 119 (1,7% wider); Financials +2
to 153 (1,3% wider); Cross +5 to 480 (1,1% wider).
Stoxx Futures at 2597 / -0,3% (from 2605)
with S&P minis at 1413 (+0,1% from 1411, at European close).
VIX index at 16,5 after 16,5 yesterday same
time.
Oil 86,2/107,0 (WTI/Brent) from 85,9/107,0
(+0,3%/unch). Gold at 1701 after 1700 (+0,1%). Copper at 365 from 364 (+0,3%).
CRB at EU COB 296,0 from 298,0 (-0,7%).
BDIY remains on the slide, down to 966 from
990 (down 11% from last week).
Xmas
shipping really, really, really over? Upcoming Chinese New Year (10 Feb 2013)?
Still,
one to watch for the real economy.
EUR 1,295 from 1,297
Greek guesstimate: Through the roof, especially in 10s… 2023
40.75 / 14.15% (+175 / -60bp to yesterday) and 2042 31.0 / 11.71% (+50 / -4bp).
Buy-back price proposal: 38.1-40.1% &
30.2-32.2%
All levels COB 17:30 CET
Fast-forward
Macro and Events:
German Exports on Mon (somebody has to
grow!), ZEW Sentiment on Tue, especially flash PMI releases on Fri 14
everywhere. For the US, FOMC on Wednesday, Retail Sales and IP next Friday.
Not much pencilled in government
supply-wise, mostly bills (EUR 4bn Dutch 3 & 6m and EUR 6bn French 3, 6 and
12m on Monday; Belgium, Greece, Spain on Tuesday). Some Periphery bonds next
Thu.
EC: Mon 10 Sentix Sentiment fcst -18 after
-18.8; Tue ZEW Sentiment, Wed IP fcst +0.3% after -2.5% MoM sa; Fri flash PMI
Comp fcst 46.9 after 46.5
GE: Mon Exports fcst -0.6% after -2.4%, Tue
ZEW Sentiment fcst 6 after 5.4; Wed 12 CPI; Fri flash PMI MfG fcst 47.1 after
46.8 and Services fcst 50.3 after 49.7
FR: Mon Biz Sentiment, IP fcst +0.1% after
-2.7% MoM, Wed 12 CPI, Fri flash PMI MfG last 44.5% and Services last 45.8
Italy: Mon IP fcst -0.3% after -1.5%, Wed
final Q3 GDP; Thu CPI; Fri Government Debt
Spain: Wed Housing transactions; Thu CPI,
Fri 14 Q3 House Prices & Labour Costs
US: Mon nothing; Tue Small Biz Optimism
last 93.1, Wholesale Inventories fcst +0.4% after 1.1; Wed FOMC; Thu Retail
Sales fcst +0.3% after -0.3%, PPI, Claims; Fri CPI, PMI last 52.4, Industrial
Production fcst +0.2% after -0.4%, Capacity Utilization.
Click
link under title or below for today’s musical support:
Lacking
further inspiration a song about increasing “Bruttosozialprodukt” (German for
GDP) might seem fitting.
For
non-German speaker, English lyrics here.
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