09 Nov 2012 – “ No More ” (Duff McKagan’s Loaded, 2009)

09 Nov 2012 – “ No More ” (Duff McKagan’s Loaded, 2009)
Music Link

Europe had wanted a rebound, tried to hold on, panicked, sold off, triggered stops – and recovered as the US, although not rebounding fast and furious, at least held the line. EGB running a little out of steam, although August levels were traded again in Bunds. Periphery eventually tracking Risk, but with no own dynamic. Need to see how things close tonight. No More.
"No More" (Bunds 1,34% -2; Spain 5,81% -3; Stoxx 2481% +0,1%; EUR 1,271)
---
Post European COB price action in the US on Thursday again to the downside with the S&P finally breaking the 200d average at 1380 (as already before INDU and NASDAQ), which doesn’t bode well if confirmed to end the week. Fiscal Cliff base jumping, here we go.
Very nice 30 YRS auction, which confirmed our view that USTs were mainly held back by the upcoming yesterday afternoon. 10 YRS snapped back with a vengeance.
Asia mainly closing the week in the red, although in contained manner (roughly 0.5% to 1% lower). Not much in overnight news.

Chinese numbers looking good, but who would have thought otherwise, as published during the change of guards So, just for the record: CPI +1.7% (fcst +1.9% unch), PPI -2.8% (fcst -2.7% after -3.6%), IP +9.6% (fcst +9.4% after +9.2%), Retail Sales +14.5% (fcst +14.4% after +14.2%), all YoY). Aren’t these nice ones to bid goodbye to chanting masses?
French IP a huge miss, but given Germany’s performance and the French inner wiggles, who would be surprised? IP -2.7% MoM (fcst -1% after +1.5%, rev. +1.9%). Manufacturing ranking 3.2% (fcst -1.3% after +1.8%, rev. +2.1%). YoY view is -2.5% for both. BdF Biz Sentiment surprisingly stable at 92 (fcst 90 after 92). Q4 BdF growth outlook lowered to -0.1%, which seems highly optimistic. Italian IP in line with expectations at -1.5% MoM (fcst -1.6% after +1.7%) / -4.8% YoY (fcst -4.7% after -5.2%). On non-seasonally-adjusted basis, it remains a 10.5% YoY slump. Final German CPI as expected +2.1% (EU harmonized).

European open close to home – and that’s already a performance (given the US lead), although initial early future quotes were even on the upside, in mild-only Risk Off.
EGBs one to two basis point tighter with Bunds at 1.35%, Periphery softer with Italy at 5.04% (+4) and Spain 5.86% (+2), and past the 450-mark (last hit on 26 Sep and broken to the downside on 06 Sep, when Mario unveiled the OMT officially).
UST at 1.62% 6 tighter than at EU COB, basking after the well-bid 30 YRS auction.
Credit 1.5-2% wider, weaker than stocks opening a tick lower.
Commodities about 0.5% firmer across the board with EUR unchanged at 1.275. Obviously waiting for US input.

Not too much to chew on: Austria reaffirmed by Fitch. Moody’s still seeing Grexit risks (Duh!), Spain’s rating growth-dependent (Duh!) and to finalize view on France in the coming week’s (Ah?!).  EU official comments "We will discuss Greece in great detail, Spain in considerably less detail, Cyprus even less detail." Just some more of the same. Definitively nothing for Greece next week, as the Troika report remains incomplete. EUR 31.3bn aid tranche stuck. Nevertheless, it has been ascertained that Greece’s EUR 4bn+ T-bill redemption next Friday will, somehow, be dealt with (next to today’s EUR 1.6bn one). Whatever, there will be a bill sales on Tuesday, too, which the Treasury will pump up to EUR 1bn 3m and EUR 2.125bn 4-week bills. Seems chunky by the usual EUR 1-1.5bn size, but those 4-w bills will probably go directly from the banks to the National Bank of Greece, with everyone (and Mario) looking elsewhere so not to see this. It looks like return to primary surplus in two more years is eventually being haggled. Usual brinkmanship.

No auction supply today. Yesterday’s Spanish paper still bleeding by mid-morning at 3 YRS 3.80% (COB 3.78% auction 3.66%), new 5s Jan 2016 4.78% (COB 4.79%, auction 4.68%) and 2032s at 6.45% (COB 6.40%, auction 6.33%).
Next week mostly uninspiring with the usual bills supply (France, Germany, Italy, Belgium, Greece), up to EUR 3bn Dutch 10 YRS (Tue), EUR 4bn new German 5 YRS (Wed) and EUR 7.5bn 2, 3 and 5 YRS BTANs and OATs out of France (Thu). Italian bond auction on Thursday will, of course, be of interest.
German and French bills on Monday will hardly rock the markets.

Sudden bond jolt around noon CET with ALL 10 YRS 3 bp tighter (including Italy and Spain) with equities drifting lower. EFSF at all-time low of 2% / +67 to Bunds.
Pretty much Risk Off mood, after, once more, opening good to sideways. Equities off 0.75% by mid-day with S&P futures back to the lows. Credit softer by 2.5-4% with financials sold.
Bunds 1,33% (-3), OBLs 0,35% (-3), BKOs -0,041% (-1,1). UST at 1,59% (-9), an impressive tightening.
Spanish 2s at 3,15% (-1), 10s at 5,82% (-2). Spanish 2-10s 267bp (-1).
Italian 2s at 2,14% (-1), 10s at 5,00% (unch). Italian 2-10s 286bp (+1).
EUR on ROFF down to 1.272 support. Commodities pat at morning levels.

Getting some good pressure on Risk with US accounts starting the day, EStoxx down over 1.5% and S&P futures down to 1365, pushing as well the EUR below 1.27, before getting some respite. Bunds printing 1.32%, the lowest yield since 30 Aug.

Afternoon session kick-started with US Import Prices at 0.5% MoM (fcst 0.0% after +1.1%). +0.4% YoY (fcst -0.5% after rev. -0.5%). Ex +0.3% MoM. Generally, not exactly a market shaking data-set, but seems quite high. Export prices flat MoM (fcst +0.2%).
US cash open actually tamer than one could have expected (INDU down just a little, S&P and NASDAQ flattish; UST ticking back up over 1.60%). U Michigan Confidence numbers above consensus at 84.9 (fcst 82.9 after 82.6) and Wholesale Inventories rising 1.1% (fcst +0.4% after +0.5%, rev. 0.8%) then led to some stability and a rebound in Risk assets. S&P back over 1380 level and EStoxx turning back positive again. If no furious rebound, at least a temporary respite.

Equities battled hard to eventually close unchanged, as yesterday, with Credit even more from its widest levels.
Periphery eventually tracking risk, but with no real conviction nor own dynamic, be it to the downside or in the recovery. Still, Italy below 5% on paper and Spain not at 6% (yet) and not over 450 to Bunds (at close).
Note that the EUR swap curve out to 9 YRS managed to tick down to yet another historic low.
Spanish auction paper finally less painful at 3.74%, 4.75% and 6.42%, although still negative.
Bunds closed at 1,34% (-2), OBLs at 0,36% (-1) and BKOs -0,036% (-0,6) with UST at 1,62% (-6)
Spanish 2s at 3,09% (-7), 10s at 5,81% (-3). Spanish 2-10s 272bp (+4).
Italian 2s at 2,11% (-4), 10s at 4,97% (-3). Italian 2-10s 286bp (+1).
Oil getting some steam and closing a good 1% higher. Gold less ebullient, but eventually up 4% from Monday’s lows. EUR stable.

Take-away: Europe had wanted a rebound, tried to hold on, panicked, sold off, triggered stops – and recovered as the US, although not rebounding fast and furious, at least held the line. EGB running a little out of steam, although August levels were traded again in Bunds. Periphery eventually tracking risk, but with no own dynamic. Need to see how things close tonight. No More.

Outlook for Monday: Who knows… EU meeting to support Greece will most probably end with Greece being supported, should Greek politics hold up over the weekend and the budget vote. Not much of hard or interesting data on Monday, either. Spanish housing transaction will bring back the focus on that sore subject. Need to see how things close tonight..

Need to grab those charts again: European equities now seriously through 50d average levels. Need to add 100: EStoxx 2515/2420 (50d/100d), DAX 7282/6991, CAC 3459/3375, MIB 15717/14898, IBEX 7855/7376.
US: 100d/200d for INDU 13124/12993, SPX 1403/1381 and NASDAQ 3017/2983, as Apple-challenged (200d 594).
EUR: 100d 1.2635 & 200d 1.2824. Fibo retracement (of May 2011 1.494 & Jul 2012 1.204) at 1.273 (tested this morning) & 1.315. Jul 2012 to Sep rebound levels: 1.231 – 1.247 – 1.261 – 1.274 – 1.291.

New Issues provided by French CFF for EUR 1bn 10 YRS OF covered bonds at MS +74 and German Chemist Lanxess with EUR 500m 10 YRS at MS +107, next to a EUR 500m increase of an outstanding 7 YRS Joint German Länder benchmark at MS +6.

Don’t miss the Shuffle Rewind over the weekend.

Don’t hesitate to exchange with the author. All comments, suggestions, rants are welcome.

Closing levels:
10 YRS Yields: Germany 1,34% (-2); Luxembourg 1,49% (-3); Netherlands 1,61% (-1); Finland 1,63% (-2); Swaps 1,68% (-3); EU 1,73% (-3), Austria 1,80% (-4); EIB 1,89% (-3); EFSF 2,00% (-4); France 2,12% (-4); Belgium 2,30% (-3); Italy 4,97% (-3); Spain 5,81% (-3).

10 YRS Spreads: Luxembourg 15bp (-1); Netherlands 27bp (+1); Finland 29bp (+0); Swaps 34bp (-1); EU 39bp (-1); Austria 46bp (-2); EIB 55bp (-1); EFSF 66bp (-2); France 78bp (-2); Belgium 96bp (-1); Italy 363bp (-1); Spain 447bp (-1).

EUR swap curve 2-5 YRS 46bp (-1,0); 5-10 YRS 82bp (-1,0) 10-30 YRS 58bp (unch).
2 YRS German BKOs closed -0,036% (-0,6) and 5 YRS OBLs 0,36% (-1).
Main +1 to 132 (0,8% wider); Financials +5 to 180 (2,9% wider); Cross +1 to 534 (0,2% wider).

Stoxx Futures at 2481 / +0,1% (from 2479) with S&P minis at 1382 (-0,3% from 1386, at European close).
VIX index at 18,0 after 18,4 yesterday same time.
Oil 85,7/108,0 (WTI/Brent) from 84,5/106,4 (+1,5%/+1,5%). Gold at 1734 after 1723 (+0,6%). Copper at 343 from 345 (-0,6%). CRB at EU COB 292,0 from 291,0 (+0,3%).
BDIY finally rebounding, up 2.6% to 940. Down 15% from the latest high at 1109 on 23 Oct.

EUR 1,271 from 1,275

Greek guesstimate: Greek bonds having clung (and probably be traded up and squeezed over the last days) got trashed today, despite the vote, with 2023s stable at 18% and 2042s 25 better at 15.5%. Obviously, Mario’s comment that the ECB has done all it could for Greece was not expected.

All levels COB 17:30 CET

Fast-forward Macro and Events:
Looks patchy data-wise. Pretty much nothing on Monday. ZEW on Tue. EZ Industrial Production on Wednesday to get serious, as well as US Retail Sales and Biz Inventories. Preliminary European Q3 GDP figures next Thursday. US IP on Friday.

EZ: Tue ZEW Sentiment; Wed IP fsct -1.8% MoM after +0.6%; Thu 3Q GDP estimate fcst -0.2%, ECB monthly report, CPI fcst 2.5%; Fri Cars
GE: Mon Wholesale PX; Tue ZEW Current fcst +8.2 after 10, Sentiment fcst -10 after -11.5; Thu Q3 GDP fcst +0.1% after +0.3% QoQ
FR: Tue Nov Q3 unemployment; Wed CPI fcst 2.1% after 2.2%; Thu Q3 GDP fcst flat unch
Italy: Tue Nov CPI final 2.8% & Gov Debt; Thu Q3 GDP fcst -0.5% after -0.8%
Spain: Mon Nov House transactions; Tue Final CPI fcst 2.5%, Thu Q3 GDP fcst -0.3% unch
US: Mon 12 Nov Veterans Day Wed PPI fcst +0.2% MoM after +1.1% Ex +0.2% after 0%, Retail Sales fcst -0.1% after +1.1%, Ex +0.3% after +0.9%, Biz Inventories fcst +0.4% after +0.6%; Thu CPI, Empire MfG, Philly FED & Claims; Fri IP and Capacity Utilization.
China: Sat Trade

Click link under title or below for today’s musical support:
You like my pain you can't resist it / So go ahead and say it one last time / You don't believe no more... No more
Music Link

http://www.aviewfrommyscreens.com

Don’t hesitate to exchange with the author. All comments, suggestions, rants are welcome.

08 Nov 2012 – “ Bop 'Til You Drop ” (Rick Springfield, 1984)

08 Nov 2012 – “ Bop 'Til You Drop ” (Rick Springfield, 1984)
Music Link

Hmmm… Initial rebound after yesterday’s bashing was rather modest, settling on a bit better and awaiting US input. Spain overdid its auction, which looked just good in the sense of being able to say it sold a new bond for size – to its dealers. ECB, happy to have provided the idea of OMT to save the world from simple panic, now going pessimistic (in non-panicky way). It’s just soft out there… It’s the economy, Stupid! And it is weak.
"Bop 'Til You Drop " (Bunds 1,36% -2; Spain 5,84% +16; Stoxx 2479% +0,1%; EUR 1,275)
---
So we closed Wednesday with the biggest drop in US equities in a year. If that isn’t a great start for Obama 2.0… Interesting price action with the INDU trying to rebound to its 200d average, just as Boehner started to speak; sending stocks back again 0.5% further lower into the close. INDU below luck 13k and S&P below 1400 with Apple now officially in a bear market. Fiscal cliff: bi-partisan agreement on raising taxes and lowering spending? Isn’t that what they call austerity in other parts of the world???
Asia soft, but not overly given the US bashing last night (roughly -1.5 to 2%). Chine Party Congress starting. Targeting doubling income over the next 10 YRS implies a 7% annual growth. Many would die for that, but it will realistically be slower than in the past 10 years.
Greece passed (in visibly tensed mood) its austerity package in Parliament yesterday (with several coalition members sacked thereafter for voting against). Still needs to pass budget on Saturday, though.

Now back to reality (once more): German Sep trade numbers worse than expected with Exports down 2.5% MoM (fcst -1.5% after +2.4%, rev. 2.3%) and Exports, too, a miss at -1.6% (fcst -0.4% after rev. +0.4%). No real surprise, though, given the latest series of German figures.
New Greek all-time Unemployment rate of 25.4% for August (up from 24.8%) and Youth UE at 58%.
No positive impact of the Greek vote on its bonds (+25 bp).

Initial European cash equity open spike around +1% (Why?), but a rather short-lived outperformance of the US closing levels and equity futures (+0.1-0.2% to European COB levels), rapidly settling for +0.5%, which is fair enough a rebound already. Maybe hoping for some Mario magic later. Credit opening a little tighter, too.
EGBs flat to a tick tighter (with USTs +3 compared to yesterday, digesting the auction). Periphery a little wider, unsurprisingly ahead of the Spanish auction.
Commodities still depressed with WTI at $85. Gold holding ok, eventually. EUR 1.276

Markets balancing out within the next hour with EGBs roughly all flat. Equities ticked a little lower from the opening levels, but without correcting the opening gap, then higher again in the course of the morning.

Spanish auction as supply-highlight of the week with the Spanish Treasury not resisting over-allotting bonds with EUR 4.76bn sold on a EUR 4.5bn target: EUR 992m 3 YRS at 3.66% (COB 3.69%) (last auction 3.227% on 18 Oct), EUR 3.04bn new 5 YRS 4.500% Jan 2018 benchmark at 4.68% (COB 4.67%) and venturing into a EUR 731m 2032 increase at 6.328% (COB 6.34%).
3 YRS were auctioned 3.227% on 18 Oct, 3.228% on 04 Oct, 3.845% on 20 Sep and 3.676% on 06 Sep after being OMT’ed from 5.086% and 5.457% in July). So in any case, at 3.66%, we’re backing up from the lows and coming back to immediate post OMT-announcement levels.
Last auctions were 18 Oct for a combined EUR 4.61bn in 3, 4 and 10 YRS and 04 Oct for EUR 4bn 2, 3 and 5s.
Auction prices showed a hefty tail in the new 5 YR, which was allocated up to 4.769% (thus 9 wider than average). Tails in 2s limited (1.8bp) and in 2032s at 3.6bp, probably more justifiable given the maturity.
Bit of a spontaneous indigestion with 2s widening 2bp and 10s 6bp, along side Italy harmed by BoI numbers on bad bank loans rising over 15% (although, next to deposits up 5.7%).

Spanish Treasury now through with its 2012 funding and keeping the auction pace to pre-fund next year.
As it happens, a similar statement out of Belgium, “unconcerned” by its 53.1% share of the Dexia recap (EUR 5.5bn), as targeted funding is done and an unchanged auction schedule will allow funding this. The guarantee mechanism has been adapted, too, lowering the Belgian and Luxembourg shares to respectively 51.41% (from 60.5%) and 3% and increasing France’s to 45.59% (from 36.5%) of EUR 85bn (down from EUR 90bn).

Had by noon CET Spain and Italy trading wider, up to 5% (+10) and 5.80% in 10s (+12), before regaining some composure. Spanish auction paper o the heavier side at 3.78% (+12), 4.79% (+11) and 6.40% (+7).
Had ESM Chief Regling saying the ESM would help Spanish banks refinance in “a couple of weeks” (…).
Statements about Greek decisions varying between “hopeful next week” (EU) and “not too soon” (Schaueble).

Again, a less exuberant midday picture than in the morning, but still on the positive side: equities still up some +0.5-0.7% (with US futures ticking back towards unchanged levels). Credit a tick tighter.
EGBs by and large flat with the Periphery still on the heavier side after the auction and maybe in belated reaction to yesterday’s rather stable behaviour (Italy widened just by 1, Spain by 4) in a seriously ROff environment.
Bunds 1,37% (-1), OBLs 0,37% (-1), BKOs -0,038% (+0,3). UST at 1,67% (+3)
Spanish 2s 3,18% (+10), 10s 5,81% (+13). Spanish 2-10s 263bp (+3).
Italian 2s 2,15% (+2), 10s 4,98% (+8). Italian 2-10s 284bp (+7).
EUR mid 1.27s, having tested a 1.272 low. Commodities stable on yesterday’s closing levels.

ECB and BOE unchanged – as expected.

US claims better than expected (but how reliable are NE numbers after last week???) at 355k (fcst was 363k) with Continuous Claims at 3127k (fcst 3257k after rev. 3262k).

ECB introduction bleak: no inflation – and now growth… Q&A unexciting. The ECB is there, the OMT is there for tail risk, the rest is up to the governments (…). And the weaker economy… Usual questions on Periphery and Greece ("by and large done on Greece")and answers that the ECB is there for Stability and Monetary Transmission. Usual answers. Actually a non-funny and non-relaxed, if not tense Mario. Not an entertaining show today… [Introduction here, Q&A added later]

Some drift lower in Risk Appetite, but waiting for ECB goodies (or not) and for the US open, which was eventually +0.25% (good), but didn’t hold (less good). Still European Risk remaining in the green and the EGBs on stand-still. INDU attempt and failure to hit the 200d line sent it back to closing levels, and then through, dragging Europe lower, but still slightly outperforming and visibly unwilling to break lower, as long as the INDU won’t break yesterday’s lows at 12877.

Equities battled hard to eventually close unchanged, as was broadly Credit, too.
EGBs seemingly reluctant to tighten further (with USTs still wider than yesterday ahead of the 30 YRS auction), but somehow pushed by a weaker Periphery. Italy back on symbolic 5% and Spain soft. Need to see whether we’ll have a Friday short squeeze (OMT rumours, but fading) or whether we’ll hit 6%.
Auction paper heavy at 3.80%, 4.79% and 6.45% (from auction levels of 3.66%, 4.68% and6.33%).
Bunds closed at 1,36% (-2), OBLs at 0,37% (-1) and BKOs -0,030% (+1,1) with UST at 1,68% (+4).
Spanish 2s at 3,16% (+8), 10s at 5,84% (+16). Spanish 2-10s 268bp (+8).
Italian 2s at 2,15% (+2), 10s at 5,00% (+10). Italian 2-10s 285bp (+8).
Oil remains soft. Gold a little firmer. Copper stable. EUR stable (see chart levels below).

Had Greek bonds trashed (+125bp) throughout the day (at open), after Mario’s comments that the "ECB is by and large done on Greece” and finally because any Greek support and EZ conference call seems to get shifted away in time.

Take-away: Hmmm… Initial rebound after yesterday’s bashing was rather modest, settling on a bit better and awaiting US input. Spain overdid its auction, which looked just good in the sense of being able to say it sold a new bond for size – to its dealers. ECB, happy to have provided the idea of OMT to save the world from simple panic, now going pessimistic (in non-panicky way). It’s just soft out there… It’s the economy, Stupid! And it is weak.

Outlook for tomorrow: TGIF. Chinese data dump (CPI fcst +1.9% unch, IP fcst +9.4% after 9.2%, Retail Sales fcst +14.4% after 14.2%), which cannot but be positive, as coming during the Party Congress. Final German CPI at 2.1%, French Biz sentiment fcst 90 after 92 and Italian IP fcst -1.6% MoM  / -4.7% YoY after +1.7% / -5.2%. US Michigan Confidence fcst 83 after 82.6 and Wholesale Inventories fcst +0.4% after +0.5%. We’ll know how equities and the 30 YRS auction fared in the US. Then we'll see…

Need to grab those charts again: European equities still clinging near 50d average levels: EStoxx 2515 (through), as for the DAX 7280 (through), CAC 3460 (through), MIB 15718 (through) & IBEX 7854 (through).
To complete average levels: 100d/200d for INDU 13123/12992 (through/just bounced off it for a couple of minutes and crashed through), SPX 1403/1380 (above), hence not that far, and NASDAQ 3016/2982 (through), as Apple-challenged (200d 592), the latter now officially in a bear market.
EUR levels 100d 1.264 & 200d 1.282. Fibo retracement (of May 2011 1.494 & Jul 2012 1.204) at 1.273 (tested this morning) & 1.315. Jul 2012 to Sep rebound levels: 1.231 – 1.247 – 1.261 – 1.274 – 1.291.

New Issues restricted to 2 servings of Carlsberg with a larger EUR 750m 10 YRS at MS +98 and a EUR 250m increase of an outstanding July 2019 issue at MS +80 (over EUR 3.5bn in orders). Alliander issued EUR 400m 10 YRS at MS +57 (in conjunction with a buy-back). Had an opportunistic safe-haven increase with EIB adding EUR 750m to an outstanding Mar 2020 at MS +11.

Don’t hesitate to exchange with the author. All comments, suggestions, rants are welcome.

Closing levels:
10 YRS Yields: Germany 1,36% (-2); Luxembourg 1,52% (unch); Netherlands 1,62% (-3); Finland 1,65% (-3); Swaps 1,71% (+1); EU 1,76% (unch), Austria 1,84% (-2); EIB 1,92% (unch); EFSF 2,04% (unch); France 2,16% (-1); Belgium 2,33% (-1); Italy 5,00% (+10); Spain 5,84% (+16).

10 YRS Spreads: Luxembourg 16bp (+2); Netherlands 26bp (-1); Finland 29bp (-1); Swaps 35bp (+3); EU 40bp (+2); Austria 48bp (unch); EIB 56bp (+2); EFSF 68bp (+2); France 80bp (+1); Belgium 97bp (+1); Italy 364bp (+12); Spain 448bp (+18).

EUR swap curve 2-5 YRS 47bp (unch); 5-10 YRS 83bp (unch) 10-30 YRS 58bp (+2,0).
2 YRS German BKOs closed -0,030% (+1,1) and 5 YRS OBLs 0,37% (-1).

Main +1 to 131 (0,8% wider); Financials unch to 175; Cross +7 to 533 (1,3% wider).
Stoxx Futures at 2479 / +0,1% (from 2476) with S&P minis at 1386 (-0,4% from 1392, at European close).
VIX index at 18,4 after 18,7 yesterday same time.

Oil 84,5/106,4 (WTI/Brent) from 85,3/108,0 (-0,9%/-1,5%). Gold at 1723 after 1710 (+0,8%). Copper at 345 from 344 (+0,3%). CRB at EU COB 291,0 from 297,0 (-2,0%).
BDIY unchanged, for once, at 916. Down 16% from the latest high at 1109 on 23 Oct.

EUR 1,275 from 1,276

Greek guesstimate: Greek bonds having clung (and probably be traded up and squeezed over the last days) got trashed today, despite the vote, with 2023s at 18% from 16.75% and 2042s at 15.75% from 14.5% (+125). Obviously, Mario’s comment that the ECB has done all it could for Greece was not expected.

All levels COB 17:30 CET

Fast-forward Macro and Events:
Preliminary Q3 GDP figures next week.

EZ: Tue ZEW Sentiment; Wed IP
GE: Fri CPI final 2.1% YoY; Tue 13 Nov ZEW; Thu Q3 GDP
FR: Fri Biz Sentiment (last 92), IP fcst -1% MoM /-0.1% YoY after +1.5% /-0.9%, MfG fcst -1.3% MoM/-0.1% after +1.8%/-0.4%;  Tue 13 Nov Q3 unemployment; Wed CPI; Thu Q3 GDP
Italy: Fri IP fcst -1.6% MoM/-4.7% YoY after +1.7% /-5.2%; Tue 13 Nov CPI & Gov Debt; Wed Q3 GDP
Spain: Mon 12 Nov House transactions; Tue CPI, Thu Q3 GDP
US: Fri U Michigan Conf, Wholesale Inventories, Import PX Mon 12 Nov Veterans Day
China: Fri monthly data dump CPI, IP, Retail Sales; Sat Trade

Click link under title or below for today’s musical support:
Not sure I’m the biggest fan, but the title seemed fitting. Ah, 80s Pop with synth slap bass and electronic drums…
Music Link

http://www.aviewfrommyscreens.com

Don’t hesitate to exchange with the author. All comments, suggestions, rants are welcome.

07 Nov 2012 – “ Pinball Wizard ” (The Who, 1969)

07 Nov 2012 – “ Pinball Wizard ” (The Who, 1969)
Music Link 

Exuberant start (Who knows why?), flat lunch (made more sense…), dismal afternoon (to say the least). EGBs ramped up, as the reality of the last days’ figures kicked in. And suddenly everyone woke up and saw… and bonds were right. Tommy, "See Me, Feel Me".

"Pinball Wizard" (Bunds 1,38% -5; Spain 5,68% +4; Stoxx 2486 -1,8%; EUR 1,276)
---

Interesting US “We’re now alone”-party just after the European close yesterday with equities suddenly up 0.75%, Gold surging $20, Silver 3%. Hmmm… These post-17:30 CET swings always make you look like a fool, once you just posted. Were due to rumours and counters. Whatever. Good US close. Obama now through. All rise.
Asian session by and large sideways.
Rather explosive 1%-plus surge in European equities to kick off the day. Credit Risk tightening sharply, too, at open, coming in by 3-4%.
Again EGB reaction to equity optimism rather muted with Bunds 2bp wider to 1.45% (in line with USTs at 1.71%, ahead of tonight’s auction). Other sovereigns flat to 1 wider. 10 YRS Italians and Spain 2-3 tighter with a flat short end.
Commodities on the ramp with Oil adding 2.5% since European COB, same for Gold (maintaining its $20 surge of last night). Copper up “only” 1%. EUR slightly firmer at 1.286.

Now back to reality (and we’re not talking the US fiscal cliff yet, which will pop up soon enough): Spanish IP tanking bad by 7% MoM sa in Sep (Forecast had been a smaller deterioration from -3.2% to -3.5%), YoY sa drop is a staggering -11.7% (after -3.1%). Finnish GDP still on a slow-mo (actually accelerating) slide, ticking down 0.6% in Aug.
EZ Retail sales about in line with MoM -0.2% (fcst -0.1% after +0.1%, rev. +0.2%) / -0.8% after revised -0.9% YoY.

Markets balancing out within the next hour with EGBs roughly all flat. Equities ticked a little lower from the opening levels, but without correcting the opening gap, then higher again in the course of the morning.

Additional EUR 4bn German OBLs easily sold at 0.42% (COB 0.435%) after 0.53% last month (0.61% in Sep and 0.31% in Aug). Bids for EUR 4.9bn (of which EUR 3bn at market). EUR 710m retained for market interventions. No tail. Good auction.

Slovakia getting good response to its 12 YRS with EUR 1.25bn at MS +150. Somehow a league on its own with its A2/A/A+ ratings. Nearest comp would be Belgium (Aa3/AA/AA) with Mar 2026 around 80 over swaps. Italian interpolated 12 YRS around 300 over. Poland’s 2024 (A2/A-/A-), launched early Oct at +143, around 115 over nowadays. Outstanding 2025s around MS +150. So quite generous a starting point.
The EFSF increased its May 2019 benchmark by EUR 1.5bn at MS +26.

Supply-highlight of the week will be Spain tomorrow with EUR 4.5bn of 3 YRS (last auction 3.227% on 18 Oct), a new 5 YRS 4.500% Jan 2018 benchmark and even venturing into a 2032 increase. COB Levels 3.69%, 4.67% and 6.34%, respectively. Results 10:45 CET.
Last auctions were 18 Oct for a combined EUR 4.61bn in 3, 4 and 10 YRS and 04 Oct for EUR 4bn 2, 3 and 5s.
3 YRS were auctioned 3.227% on 18 Oct, 3.228% on 04 Oct, 3.845% on 20 Sep and 3.676% on 06 Sep after being OMT’ed from 5.086% and 5.457% in July). So in any case, we’re backing up from the lows and coming back to immediate post OMT-announcement levels.

Another set of downbeat German figures (a risk pointed out yesterday) with German Sep IP tanking 1.8% MoM sa (fcst -0.7% after -0.5%, rev. -0.4%) with YOY nsa printing -1.2% (after revised -1.3%) instead of the expected 0.1%.
Unsurprising, but a downer on equity exuberance.

Midday picture far more down to earth with a bit of Risk On in EGBs (including the Periphery) and diminishing Risk appetite with equities up 0.50% and Credit 1.5% tighter (half this morning’s highs).
Bunds 1,40% (-3), OBLs 0,41% (-3), BKOs -0,022% (-0,8). UST at 1,67% (-2)
Spanish 2s at 3,00% (-2), 10s at 5,60% (-4). Spanish 2-10s 261bp (-1).
Italian 2s at 2,10% (-1), 10s at 4,87% (-2). Italian 2-10s 277bp (-1).
EUR back to low 1.28. Oil down 1% from morning levels.

Drastic change of mood thereafter with markets taking a plunge.
EU economic forecast revisions unsurprisingly with a lower bias: 2012 GDP now at -0.4% (-0.3%), 2013 down to +0.1% (from +1%). EZ debt/GDP to be 94.5% in 2013 and 94.3% in 2014.
And by and large things will be better in … 2014. [Link to full report]
Draghi speech in Frankfurt, but nothing crisp. Anyway there’s the Mario Show on the screens tomorrow anyway, so why spoil it? Oh, he did state the obvious, that Germany was starting to feel an impact. Not sure that was fresh news, though. Oh, and SMP, pfff… Feeling some back-pedalling here, too. [Link to speech]
Catalonia’s Mas again pitching a referendum on independence.

European equities hitting -1% (from over +1% high) after lunch, last seen Wednesday a week ago, before rebounding a little and then tanking again.
No US figures at all, except Oil inventories and the USD 24bn 10 YRS auction (after EU close) to steer things differently.
US cash open down 1.3% adding further pressure on European equities and taking Bunds down to 1.37%. Ding!

Merkel in usual German federalist and “need to obey rules” pitch before the EU Parliament.

Well, let’s call this a serious Risk Off day. EGBs on the ramp, although Bunds didn’t manage to hold onto their tightest levels (same as for the USTs, ahead of the auction) despite equities hitting new LODs. Still, OBL in best flight to quality drive (after its own auction) and Schätze doing great in negative territory. Periphery underperformance due to Equity / Credit ROff, but with no own negative dynamic at this stage.
Note that the whole EUR swap curve out to 9 YRS hit historical lows today (10s hit 1.66% early June and remains a little behind)!
Bunds closed at 1,38% (-5), OBLs at 0,38% (-6) and BKOs -0,041% (-2,7) with UST at 1,64% (-5)
Spanish 2s at 3,08% (+6), 10s at 5,68% (+4). Spanish 2-10s 260bp (-2). Italian 2s at 2,13% (+2), 10s at 4,90% (+1). Italian 2-10s 277bp (-1).
Oil dumped over 3% from this morning’s highs. Gold off high, but the shiniest thing out there (together with Coffee after a sleepless night). EUR back to early Sep levels at 1.276.

Take-away: Exuberant start (Who knows why?), flat lunch (made more sense…), dismal afternoon (to say the least). EGBs ramped up, as the reality of the last days’ figures kicked in. And suddenly everyone woke up and saw… and bonds were right. Tommy, "See Me, Feel Me".

Outlook for tomorrow: Spanish auction to be followed. Need to see whether and how the Greek managed to pass their austerity package in parliament. German trade figures (should saw falling exports). No further major EZ data. Mario Show in Frankfurt. US trade and Claims (fcst 366 after 363). Again light on hard data. Need to keep the whole rather conspirational “Things need to be kept together until the US election is over” in the back of one’s mind. Oh, and Chinese Communist congress, of course.
[Mistakenly wrote about Italian IP today, but that’s for Fri]

Need to grab those charts again: European equities still trading around 50ds average levels, today through, obviously: EStoxx 2513 (through), as for the DAX 7273 (through), CAC 3458 (through), MIB 15709 (through) & IBEX 7844 (through).
To complete average levels: 100d/200d for INDU 13123/12992 (through/just bounced off it for a couple of minutes and crashed through) and SPX 1403/1380 (above), hence not that far. NASDAQ 100d 3016 (through) and 200d 2983 (through), as Apple-challenged (200d 592) at EU COB. Uhhh…

Quite some traffic in New Issues. Obviously the start of the day felt better, but things went through nicely in the morning with the EFSF increasing Sep 2019 by EUR 1.5bn at MS +26, Slovakia printing EUR 1.25bn 12 YRS at MS +150 and the German Land of Hessen EUR 1bn 3.5 YRS FRN at 3m E flat for the SSA-side. SEB issuing yet again a Nordic senior financial deal with EUR 1bn 7 YRS at MS +72.
Corporates represented by Sanofi Aventis with EUR 750m 5 YRS at MS +18 (!) (a mere 1.05% in yield) and Dutch energy utility Enexis with EUR 500m 8 YRS at MS +55 (from an initial 70-75 talk).

Don’t hesitate to exchange with the author. All comments, suggestions, rants are welcome.

Closing levels:
10 YRS Yields: Germany 1,38% (-5); Luxembourg 1,52% (-5); Netherlands 1,65% (-5); Finland 1,68% (-4); Swaps 1,70% (-6); EU 1,76% (-4), Austria 1,86% (-2); EIB 1,92% (-3); EFSF 2,04% (-3); France 2,17% (-3); Belgium 2,34% (-4); Italy 4,90% (+1); Spain 5,68% (+4).

10 YRS Spreads: Luxembourg 14bp (unch); Netherlands 27bp (unch); Finland 30bp (+1); Swaps 32bp (-1); EU 38bp (+1); Austria 48bp (+3); EIB 54bp (+2); EFSF 66bp (+2); France 79bp (+2); Belgium 96bp (+1); Italy 352bp (+6); Spain 430bp (+9).

EUR swap curve 2-5 YRS 47bp (-2,0); 5-10 YRS 83bp (-1,0) 10-30 YRS 56bp (+2,0).
2 YRS German BKOs closed -0,041% (-2,7) and 5 YRS OBLs 0,38% (-6).

Main +3 to 130 (2,4% wider); Financials +5 to 175 (2,9% wider); Cross +14 to 526 (2,7% wider).
Stoxx Futures at 2476 / -2,2% (from 2531) with S&P minis at 1392 (-1,9% from 1419, at European close).
VIX index at 18,7 after 17,9 yesterday same time.

Oil 85,3/108,0 (WTI/Brent) from 86,4/108,9 (-1,3%/-0,8%). Gold at 1710 after 1694 (+0,9%). Copper at 344 from 349 (-1,4%). CRB at EU COB 297,0 from 292,0 (+1,7%).
BDIY continuing its slide, down 3.3% today to 916. Now down 16% from the latest high at 1109 on 23 Oct.

EUR 1,276 from 1,281

Greek guesstimate: Greek bonds still clinging to the late gains with 2023s at 16.75% (-25) and 2042s at 14.5% (-25).
EU comments that a solution shall be found rapidly remain hilarious. Then again, tight market, few players. A couple of millions will lead the way (average turnover is EUR 5m/day).

All levels COB 17:30 CET

Fast-forward Macro and Events:
Not much exciting data. ECB, of course. Usual Core bills. Spanish bonds on Thursday, always good for some excitement. USD 16bn 30 YRS auction tomorrow.
Preliminary Q3 GDP figures next week.

EZ: Thu ECB; Tue ZEW Sentiment; Wed IP
GE: Thu Trade with Exports fcst -1.5% MoM after +2.5% and Imports fcst -0.4% after 0.4%; Fri CPI fcst unch 2.1% YoY; Tue 13 Nov ZEW; Thu Q3 GDP
FR: Fri Biz Sentiment (last 92), IP fcst -1% MoM /-0.1% YoY after +1.5% /-0.9%, MfG fcst -1.3% MoM/-0.1% after +1.8%/-0.4%;  Tue 13 Nov Q3 unemployment; Wed CPI; Thu Q3 GDP
Italy: Fri IP fcst -1.6% MoM/-4.7% YoY after +1.7% /-5.2%; Tue 13 Nov CPI & Gov Debt; Wed Q3 GDP
Spain: Mon 12 Nov House transactions; Tue CPI, Thu Q3 GDP
US: Thu Trade Balance, Claims; Fri U Michigan Conf, Wholesale Inventories, Import PX
China: Fri monthly data dump CPI, IP, Retail Sales; Sat Trade

Click link under title or below for today’s musical support:
And suddenly they saw the light – and played a mean pinball…
Music Link

http://www.aviewfrommyscreens.com

Don’t hesitate to exchange with the author. All comments, suggestions, rants are welcome.

06 Nov 2012 – “ Elected ” (Mr Bean & Smear Campaign, 1992)

06 Nov 2012 – “ Elected ” (Mr Bean & Smear Campaign, 1992)
Music Link

Take-away: Markets have found a good excuse to be on hold. Elections. No real US figures and a tendency to ignore European ones. No shoe dropping means upside, a little. Core EGBs rather firm nevertheless, for choice. Periphery, in absence of news, trading back and forth, so better today. EZ Q4 growth looks like stalling with a catch-up of a more lenient summer. More to come.
"Elected " (Bunds 1,43% +1; Spain 5,64% -9; Stoxx 2513 +0.5%; EUR 1,281)
---

Not much to gain from an overall flattish US session. Some algo clowns managed to have INDU close right on the 100s average at 13112. And who says computers don’t have humour? S&P midway between 50 & 100d. NASDAQ juuuuuuuuust below 3000 (Clowns...). USTs stable on afternoon levels ahead of this week’s auctions.
Asia flattish, too, from an helicopter view, although Japan & China down 0.4%, balanced by OZ slightly up and Korea up 1%.
Nothing interesting at the G20.

Wow! Give me one of those “all my screens are unchanged” starting days. So everything unchanged once cash markets opened. Yesterday COB levels across the board (with the exception of Brent, up 1.4%, and, for a forensic approach, Schätze down 0.75bp to -0.015% and OBLs down 1 to 0.43%). Bunds flat at 1.42%. Equities and Credit flat. Periphery flat. EUR flat. Flat. Flat. Flat.

Rajoy on radio, stating that support would be asked for if yields were substantially higher (…), as 2012 funding is by and large done (including contingent accounts?)(…), and still needs to know, if costs would then be slashed by 200 or 400bp. So only if 10 YRS were to hit 9%???

Final Service PMI data for October showing an improvement in Spain (41.2 versus 40.2 flash) and Italy (46 vs. 44.5), but a marked deterioration in France (44.6 vs. 46.2) and a weaker German reading (48.4 vs. 49.3). Locomotive(s) running out of steam… Final EZ reading hence at 45.7 (Composite) and 46.0 (Services) after initial estimates of 45.8 and 46.2. Lowest reading since respectively June and July 2009. German Coastguards, to the rescue!
Not much of an impact, though, had actually a small jolt upwards in equities, for choice. Actually Periphery bonds getting some support and tightening in by 5 bp by mid-morning, and in reaction weighting on Bunds (+2).
EZ PPI at +0.2% MoM (from +0.9%) and unchanged at 2.7% YoY.

France pledging to improve finances and to kick off a competitively boost (in 2014) by cutting Gov Spending by EUR 10bn/year, offering tax credits to lower employment costs and by increasing headline VAT to 20% (from 19.6%) and adjust intermediate levels to 5% (from 5.5%, mainly food & energy) and to 10% (from 7%, restaurants and home improvements) from 2014 on.

Final data set out of Germany with Factory Orders a huge miss, dropping 3.3% MoM sa (-4.7% YoY nsa), well below forecasts of -0.4% after -1.3%, despite being revised to -0.8%. YoY data on trend after -4.8%, revised -4.6%. Locomotive stalling.

Bond supply from Austria with EUR 1.32bn split in EUR 660m 2019 at 1.218% (last 1.33%) and EUR 660m 10 YRS at 1.888% (last 2.36%, albeit back in June). COB RAGB 2019 1.25% and 2022 1.93%. Nice one here! Lucky number, too: 10 YRS auctioned and then traded at historic low.
Bills out for Greece with EUR 1.3bn 6m at 4.41% (last 4.46% ), for the EFSF EUR 1.9bn 3m at -0.029% (last -0.043%) and for Belgium EUR 1.2bn 3m at +0.004% & EUR 1.3bn 6m bills at +0.021% (last -0.003% and +0.017%).

Additional EUR 4bn German OBLs on the plate tomorrow (COB 0.435%).
Supply-highlight of the week will be Spain on Thursday with EUR 4.5bn of 3 YRS, a new 5 YRS 4.500% Jan 2018 benchmark and even venturing into a 2032 increase. Last auctions were 18 Oct for a combined EUR 4.61bn in 3, 4 and 10 YRS and 04 Oct for EUR 4bn 2, 3 and 5s

Midday picture somewhat better and a little rosier. Equities up 0.6% from close, risk 2-3 ticks tighter (-1.6%).
Bunds getting a tick uplift from the Factory orders. Austria basking at historic lows and nearing Germany (+46), pushing away from France (-31). Belgium tightening in on France (+18) with OATs pretty unmoved by the government announcements. Periphery holding to some of the mid-morning gains.
Bunds 1,43% (+1), OBLs 0,44% (-1), BKOs -0,014% (-0,5). UST at 1,71% (+3)
Spanish 2s at 3,07% (-4), 10s at 5,69% (-4). Spanish 2-10s 262bp (-1).
Italian 2s at 2,16% (-8), 10s at 4,93% (-6). Italian 2-10s 277bp (+2).
Oil getting some good traction with Brent adding another small 1% to already better morning levels and WTI following (+2.6% / +1.3%). EUR just above 1.28.

No early afternoon US figures to get things moving ahead of the US cash open, which opened in line with the slightly positive biased European mood, with indices ticking up half a percentage point, clinging to that despite NY ISM figures showing a drop to 45.9 from 52.9, a level last seen in Oct last year and before that in 2009.

Europe closing in rather upbeat mood. Equities ok, Credit fine, Periphery recouping yesterday’s losses. Italy actually doing even better. Core EGBs still firm with Austria flying to join that bracket. France lagging.
Bunds closed at 1,43% (+1), OBLs at 0,44% (-1) and BKOs -0,014% (-0,5) with UST at 1,69% (+1) with a 3 YRS auction later.
Spanish 2s at 3,02% (-9), 10s at 5,64% (-9). Spanish 2-10s 262bp (-1).
Italian 2s at 2,11% (-13), 10s at 4,89% (-10). Italian 2-10s 278bp (+3).
Strong Oil. Other commodities sideways. EUR stable.

Take-away: Markets have found a good excuse to be on hold. Elections. No real US figures and a tendency to ignore European ones. No shoe dropping means upside, a little. Core EGBs rather firm nevertheless, for choice. Periphery, in absence of news, trading back and forth, so better today. EZ Q4 growth looks like stalling with a catch-up of a more lenient summer. More to come.

Outlook for tomorrow: More of the same. German IP fcst -0.7% MoM after -0.5%, but might tick lower given today’s Factory orders. Italian and Spanish IP, as well, fcst -1.6% after +1.7% and -3.5% after -3.2% MoM. Last IP YoY numbers sobering with Germany -1.4% Italy -5.2% Spain -3.1%... EC economic forecast & Merkel speaking at the European Parliament.
Seems like a close call in the US. We should know (or not), if counting chads (whether hanging, swinging, tri-chads or dimpled ones) will be needed in the US. A reminder. No major US data.

Periphery day in New Issues with Italian gas utility SNAM in a 2-tranche exercise for EUR 750m each of 3 YRS at MS +150 and Feb 2020s at MS +220 (about 75bp through Italy for both at initial levels), next to Spanish Insurer Mapfre raising EUR 1bn 3 YRS at 5.125% (MS +460s, some 140 over Spain). German SAP 2-trancher with EUR 550m 3 YRS at MS +52 and EUR 750m 7 YRS at MS +92.

Don’t hesitate to exchange with the author. All comments, suggestions, rants are welcome.

Closing levels:
10 YRS Yields: Germany 1,43% (+1); Luxembourg 1,57% (+1); Netherlands 1,70% (+1); Finland 1,72% (+1); Swaps 1,76% (+2); EU 1,80% (unch), Austria 1,88% (-5); EIB 1,95% (-2); EFSF 2,07% (unch); France 2,20% (-1); Belgium 2,38% (-3); Italy 4,89% (-10); Spain 5,64% (-9).

10 YRS Spreads: Luxembourg 14bp (unch); Netherlands 27bp (unch); Finland 29bp (unch); Swaps 33bp (+1); EU 37bp (-1); Austria 45bp (-6); EIB 52bp (-3); EFSF 64bp (-1); France 77bp (-2); Belgium 95bp (-4); Italy 346bp (-11); Spain 421bp (-10).

EUR swap curve 2-5 YRS 49bp (unch); 5-10 YRS 84bp (+2,0) 10-30 YRS 54bp (unch).
2 YRS German BKOs closed -0,014% (-0,5) and 5 YRS OBLs 0,44% (-1).

Main -2 to 127 (-1,6% tighter); Financials -3 to 170 (-1,7% tighter); Cross -6 to 512 (-1,2% tighter).
Stoxx Futures at 2531 / +0,5% (from 2518) with S&P minis at 1419 (+0,7% from 1409, at European close).
VIX index at 17,9 after 18,3 yesterday same time.

Oil 86,4/108,9 (WTI/Brent) from 85,2/105,9 (+1,4%/+2,8%). Gold at 1694 after 1683 (+0,7%). Copper at 349 from 347 (+0,6%). CRB at EU COB 292,0 from 292,0 (+0,0%).
BDIY continuing its slide, down 2.5% today from 971 to 947. Now down 12.5% from the latest high at 1109 on 23 Oct.

EUR 1,281 from 1,279

Greek guesstimate: Greek bonds sharply tighter without specific reason (outside the general strike for the next 48 hours with 2023s at 17% from 18% and 2042s at 14.75% from 15.75%. EU comments that a solution shall be found rapidly are hilarious. Then again, tight market, few players. A couple of millions will lead the way.

All levels COB 17:30 CET

Fast-forward Macro and Events:
Not much exciting data. ECB on Thursday, of course.
Uninspiring, supply-wise. Usual Core bills. German 5 YRS on Wed. Spanish bonds on Thursday, always good for some excitement.
US 10 YRS on Wed and 30 YRS on Thu.

EZ: Wed Retail Sales fcst -0.1% MoM /-0.8% YoY after +0.1%/-1.3%; Thu ECB
GE: Wed IP fcst-0.6% after -0.5%; Thu Trade with Exports fcst -1.5% MoM after +2.5% and Imports fcst -0.4% after 0.4%; Fri CPI fcst unch 2.1% YoY.
FR: Fri Biz Sentiment (last 92), IP fcst -1% MoM /-0.1% YoY after +1.5% /-0.9%, MfG fcst -1.3% MoM/-0.1% after +1.8%/-0.4%
Italy: Fri IP fcst -1.6% MoM/-4.7% YoY after +1.7% /-5.2%
Spain: Wed IP fcst -3.5% YoY after -3.2%
US: Thu Trade Balance, Claims; Fri U Michigan Conf, Wholesale Inventories, Import PX
China: Fri monthly data dump CPI, IP, Retail Sales; Sat Trade

Click link under title or below for today’s musical support:
Music Link
Of course, we bow out to the original version by Master Alice Cooper (1972). Link.

http://www.aviewfrommyscreens.com

Don’t hesitate to exchange with the author. All comments, suggestions, rants are welcome.

05 Nov 2012 – “ Nothing Really Matters ” (Madonna, 1999)

05 Nov 2012 – “ Nothing Really Matters ” (Madonna, 1999)
Music Link

Take-away: Nothing really mattered… Eventually. Europe correcting Friday’s excessive optimism, in line with the US, treading water ahead of the elections. Still, the Periphery remained under (controlled) pressure with Spain cornering most, if not all negative headlines today – ahead of Thursday’s auction. 10 YRS periphery backing up to (selective) symbolic levels of 5% and 5.75% (damn’ near 6%).
---

While Friday’s European session (and the week overall) ended in a surprisingly mixed manner with equities squeezing out yet some more upside, while safe haven bonds enjoyed a stronger session, too, the US close was rather poor with US indices losing about 1% once Europe headed into the weekend with some downside key levels broken: 100d for INDU 13107 (through at 13093 on NY close) and SPX 1399 (1414 NY close, 1% away), hence not that far. NASDAQ 100d 3012 (through at 2982 close) and 200d 2979 (Right on it), as Apple-challenged, closing down 3.3% on Fri at 577 (200d 590).
Asian week opening hence unsurprisingly in the red, down about 0.50% across the board, ahead of tomorrow’s US show-down and Thursday’s start of the Chinese Change of Guards congress.
Mixed Chinese PMI data with the official Oct non-Mfg (unsurprisingly) better at 55.5 after 53.7, but with HSBC’s Service one down to 53.5 from 54.3.
Weekend news flow rather on the thin side. Merkel cautious on the end of the crisis (yet another 5 years), not to be confused with Hollande’s call (over). Greece situation still Homeric.

Spanish unemployment surging to 128.2k from 79.6, far above a +110k forecast, setting the scene for some Periphery discomfort.

Europe kicking off the week in unsurprisingly corrective mood, although 0.5% off equities doesn’t seem to be wild (considering e-minis down 1% from European COB). EGBs gathering strength again, with not much in terms of Core supply on the plate to weight on the markets this week (outside US auctions). Risk Off mood with 10 YRS Bunds opening 2 tighter at 1.43% and our sneaky friend Schatz dipping a toe in negative territory at -0.008% (1 tighter) for the first time since early Sep. Periphery defensive with Spain out by 8 to 5.72% in 10s and 3.10% in 2s, taking Italy hostage with 10s flirting the 5%-mark (+6) and 2s 5 wider, as well. Credit soft at +3/5 points (2.5-3%). Commodities a tick weaker. EUR opening through the 28-handle for the first time since early Sep, too.

Government supply restricted to uneventful bill sales. Dutch bills for about EUR 1.2bn each in 3m at -0.030% (after -0.037%) and 6m at -0.012% (after -0.21%). Weekly French fare with EUR 3.8bn 3m at -0.014% (after -0.022%), EUR 1.6bn 6m at -0.007% (after -0.012%) and EUR 1.4bn 12m at +0.019% (after +0.015% ). Micro ticks wider.
Will get some Greek 6m (last 4.46% ), EFSF 3m (last -0.433%) and Belgian 3m & 6m bills tomorrow (last -0.003% and +0.017%), as well as about EUR 1.3bn in Austrian 2019 (last 1.33%) and 10 YRS (last 2.36%, albeit back in June). COB RAGB 2019 1.25% and 2022 1.93%.
EUR 4bn OBLs on Wednesday. Supply-highlight of the week will be Spain on Thursday with EUR 4.5bn of 3 YRS, a new 5 YRS 4.500% Jan 2018 benchmark and even venturing into a 2032 increase. Last auctions were 18 Oct for a combined EUR 4.61bn in 3, 4 and 10 YRS and 04 Oct for EUR 4bn 2, 3 and 5s

Interesting to have Almunia now weighting (and siding) in the regional independence question (Catalonia), stating the EU membership would only follow application, which doesn’t seem very forthcoming.
Sentix investor confidence better than expected, but without anyone caring (-18.8, fcst -21 after -22.2).

Midday picture in continuous Risk Off with Bunds at 1,43% (-2), OBLs at 0,45% (-1), BKOs -0,005% (-0,8) and UST at 1,69% (-3).
Spanish 2s at 3,08% (+5), 10s at 5,73% (+9). Spanish 2-10s 265bp (+3).
Italian 2s at 2,25% (+3), 10s at 5,00% (+7). Italian 2-10s 275bp (+3).
Equities stabilizing at -0.75%. Credit eventually only out 1 or 2 ticks (around 1%). Commodities about unchanged from morning levels with the EUR trying to fight back into the 28-handle.
No US data to kick-off the afternoon (with the US back to winter time, too; so no more “short” days with figures popping while chewing).

Spain back on the radar with the announcement of Thursday’s auction size as being EUR 4.5bn (chunky given the longer maturities), as well as blocking the candidacy to the ECB position of Luxembourg’s Merch (and not because he’s not a woman). Fantastic way to drum up Junker support. Si, si…Then again, whose support does Spain need, anyway? Then again, the Bank Of Spain expects loan defaults to rise further (…) and confirmed, among an increasing lingering discussion about whether the rating rules for bonds (lenient haircut treatment because of DBRS still rating Spain A low neg outlook since 08 Aug) apply to bills, too, that they do (…)(despite the fact that the DBRS rating seems long term only).
(…). Ah. There’s a point here, but sooner or later DBRS is bound to get nearer to its peers (Baa3 neg, BBB- neg, BBB neg) anyway and haircuts will rise (see 11 Oct 2012 – “ Jump ” (Van Halen, 1983))
In case of doubt, go to the source http://www.ecb.int/paym/coll/risk/ecaf/html/index.en.html#ratingscale

US cash open in line with futures and still on the slide for a quarter percentage point and about flat for NASDAQ. Non-Mfg ISM a small miss at 54.2 (fcst 54.5 after 55.1), but with limited impact. Strange split with a rising employment index, but falling activity.

Europe closing in ROff-mode, but eventually where we already were by noon. EGBs firm, but not outrageously (having been so already on Friday, despite the equity upswing). Note Schätze trading again in negative yield territory. France just so slightly slipping away…
Bunds closed at 1,42% (-3), OBLs at 0,44% (-2) and BKOs -0,008% (-1,1) with UST at 1,68% (-4)
Spanish 2s at 3,11% (+8), 10s at 5,73% (+9). Spanish 2-10s 263bp (+1).
Italian 2s at 2,24% (+2), 10s at 4,99% (+6). Italian 2-10s 275bp (+3).
Periphery soft. Credit about stable. EUR just under 1.28. Commodities treading water.

European equities still clinging to 50ds average levels: EStoxx 2510 (2520 close), as for the DAX 7260 (7327 close), CAC 3458 (3453 close), MIB 15688 (15544 close) & IBEX 7826 (7827).
To complete average levels: 100d/200d for INDU 13112/12988 (through/above) and SPX 1401/1379 (above), hence not that far. NASDAQ 100d 3013 (through) and 200d 2980 (above), as Apple-challenged, closing down 3.3% on Fri at 577, but rebounding to 585 (200d 591) at EU COB.

Take-away: Nothing really mattered… Eventually. Europe correcting Friday’s excessive optimism, in line with the US, treading water ahead of the elections. Still, the Periphery remained under (controlled) pressure with Spain cornering most, if not all negative headlines today – ahead of Thursday’s auction. 10 YRS periphery backing up to (selective) symbolic levels of 5% and 5.75% (damn’ near 6%).

Outlook for tomorrow: More of the same. German Factory orders to assess the speed of the locomotive (fcst -0.5% MoM after -1.3% MoM /-4.8% YoY). Final PMIs. US elections. No US numbers.

New Issues restricted to EUR 500m long 5 YRS senior paper for SpareBanken 1 at MS +105 and EUR 750m 4 YRS FRN for Land NRW at 3mE +11. Spanish Insurer Mapfre tentatively in the market for a 3 YRS issue.

Don’t hesitate to exchange with the author. All comments, suggestions, rants are welcome.

Closing levels:
10 YRS Yields: Germany 1,42% (-3); Luxembourg 1,56% (-3); Netherlands 1,69% (-1); Finland 1,71% (-1); Swaps 1,74% (-3); EU 1,80% (-3), Austria 1,93% (-2); EIB 1,97% (-3); EFSF 2,07% (-3); France 2,21% (-1); Belgium 2,41% (-1); Italy 4,99% (+6); Spain 5,73% (+9).

10 YRS Spreads: Luxembourg 14bp (unch); Netherlands 27bp (+2); Finland 29bp (+2); Swaps 32bp (unch); EU 38bp (unch); Austria 51bp (+1); EIB 55bp (unch); EFSF 65bp (unch); France 79bp (+2); Belgium 99bp (+2); Italy 357bp (+9); Spain 431bp (+12).

EUR swap curve 2-5 YRS 49bp (unch); 5-10 YRS 82bp (-1,0) 10-30 YRS 54bp (-1,0).
2 YRS German BKOs closed -0,008% (-1,1) and 5 YRS OBLs 0,44% (-2).

Main +1 to 129 (0,8% wider); Financials +1 to 173 (0,6% wider); Cross +4 to 518 (0,8% wider).
Stoxx Futures at 2518 / -0,9% (from 2540) with S&P minis at 1409 (-0,8% from 1420, at European close).
VIX index at 18,3 after 16,6 yesterday same time.

Oil 85,2/105,9 (WTI/Brent) from 85,4/106,5 (-0,3%/-0,6%). Gold at 1683 after 1676 (+0,4%). Copper at 347 from 348 (-0,3%). CRB at EU COB 292,0 from 292,0 (unch).
BDIY ticking down again to 971 from 986 (-1.5%).

EUR 1,279 from 1,284

Greek guesstimate: Greek bonds a little changed after last week’s slide with 2023s at 18% and 2042s at 15.75%.

All levels COB 17:30 CET

Fast-forward Macro and Events:
Not much exciting data. German Factory orders to name one on Tue. ECB on Thursday, of course.
Uninspiring, supply-wise. Usual Core bills. German 5 YRS on Wed.
Spanish bonds on Thursday, always good for some excitement.
US 3 YRS on Tue, 10 YRS on Wed and 30 YRS on Thu.

EZ: Tue Final Oct PMI Composite 45.8 and Services 46.2, PPI fcst 2.6% after 2.7%; Wed Retail Sales fcst -0.1% MoM /-0.8% YoY after +0.1%/-1.3%; Thu ECB
GE: Tue Factory Orders fcst -0.5% MoM after -1.3% MoM (-4.8% YoY); Wed IP fcst-0.6% after -0.5%; Thu Trade with Exports fcst -1.5% MoM after +2.5% and Imports fcst -0.4% after 0.4%; Fri CPI fcst unch 2.1% YoY.
FR: Fri Biz Sentiment (last 92), IP fcst -1% MoM /-0.1% YoY after +1.5% /-0.9%, MfG fcst -1.3% MoM/-0.1% after +1.8%/-0.4%
Italy: Fri IP fcst -1.6% MoM/-4.7% YoY after +1.7% /-5.2%
Spain: Wed IP fcst -3.5% YoY after -3.2%
US: Thu Trade Balance, Claims; Fri U Michigan Conf, Wholesale Inventories, Import PX
China: Fri monthly data dump CPI, IP, Retail Sales; Sat Trade

Click link under title or below for today’s musical support:
Well, if nothing really matters… Will get sentimental with Nothing Else Matters, if this goes on… Different.
Music Link

http://www.aviewfrommyscreens.com

Don’t hesitate to exchange with the author. All comments, suggestions, rants are welcome.

Shuffle Rewind 29 Oct-02 Nov " Where Is My Mind? " (Pixies, 1988)

Shuffle Rewind 29 Oct-02 Nov  " Where Is My Mind?  " (Pixies, 1988)
Music Link

This week in review (compared to Fri 26 Oct COB):
Click on day for related post, on title for song.

I felt we had ended the week on Fri 26 being “On the Road to Nowhere”, which essentially wasn’t that wrong a call, as markets got stuck on Sandy’s path.
As such, not the worst week to step away from my screens, as the US were shut Mon and Tue and most of Europe on Thu, bridging into the weekend, too.

Awkward to find a song for the week. Hesitated between Grease's Sandy, the NJ Boss' Sandy or Deep Purple's Smoke on the Water, but given the gravity of the situation, decided against being funny and to concentrate on the Big Disconnect between Risk and Reality, Equities and Bonds. Of course, every destruction fuels consumption at some stage, but I'm amazed that Risk was positive in a week that wasn't. Ok, China was a tick better than expected – right ahead of the governance change. Odd commodities’ behaviour (-2%) in that context, as well. Then again, the US (post-European close) was dismal.

And who is supposed to fuel that consumption, as the FED is already with the pedal to the metal and the Fiscal Cliff is not yet handled. Bah... We'll see after the elections, won't we?
Talking of changes, the Chinese Communist Party congress starting Thursday is bound to have more impact on the long term. Won't have hanging chads counting problems there, I guess. With data probably published to keep everyone’s face for the immediate future, things might be biased differently once the change of the guards will have taken place.
Europe-wise things moved from unchanged to unchanged with a negative bias.
And as Star War fan, I do shudder at the idea of a Disney-sequel... Maybe, though, we'll get the answer to the burning question, who Donald's father is, as the Duck family only seems to have Uncles (…). Bah.
Where Is My Mind?
 

Whatever, as mostly away from my screens, this will be just a rapid fly-over.

So, as last week: Nothing new. Spailout OMT still not in play – and might not be this year's business. Officially. Hmmm... Yeah. Sure. We'll see. Greece, haggling not over.

Bonds, especially the Safe Havens, back with a vengeance. Better still than last week, despite equity-only Risk On behaviour. Makes sense given the Sandy destruction and the general sense of Europe going soft. Bunds well through 1.50% again and best performer (alongside the still tightening EFSF 10 YRS). Again some good compression on the Agencies side in general. France was again a laggard (after a long end auction), now trading 12 over EFSF (from 7) and 20 through Belgium. France / Austria pair to start divorcing.
And look who’s back flirting with the 0.000%-mark! Our friend the Schatz. If that is supposed to be an expression of strong Risk On…

Rather eventless, however non-hysteric slide in Periphery bonds: Spain out by 7 in 10s to 5.64% (419 to Bunds), Italy by 4 to 4.93% (348 to Bunds). Short end about stable with 2 YRS BONOs at 3.03% (+1) and BTPs at 2.22% (-4). 2-10 curves remain about stable – and still steep – at 272 (+8) for Italy and 262 (+7) for Spain. Symbolic key levels all in place: 2% for short Italians, 3% for Spain. 5% uncomfortably in sight for Italy. 5.50% former key stress level for Spain a resistance that wasn’t broken for good. Bunds spreads widening. Nothing positive, although stress contained.

EUR swap curve totally unchanged over the week.

Credit rather uninspired. Somehow in line with equities, but just so. Half of last week’s losses recouped. Talking about ticks, here. Cross ok at 3.9% tighter.

European equity rebound, decoupling from the US. EStoxx back on the closing levels of 19 Oct (2536), S&P just half that (at European closing), worse if considering the weak Friday close (1438 on 19 Oct). European equities taking strength from US not tanking doesn’t seem the strongest trigger for a rebound. But, hey, Where IS My Mind?European equities still clinging to 50ds average levels and this week closing above: EStoxx 2509 (2547 close), as for the DAX 7256 (7364 close), CAC 3458 (3492 close), MIB 15677 (15769 close) & IBEX 7816 (7969). So roughly 1.5% over 50d, that’s the 1.5% gained over the week.
To complete average levels: 100d for INDU 13107 (through at 13093 on NY close) and SPX 1399 (1414 NY close, 1% away), hence not that far. NASDAQ 100d 3012 (through at 2982 close) and 200d 2979 (Uuuuh, on it), as Apple-challenged, closing down 3.3% on Fri at 577 (200d 590).
Given the dismal US close, once Europe was already home, expect to gap down on Monday.

Commodities once more in the doldrums, roughly down 2% across the board. Gold dim at below 1700.

Uninspiring new issues in small week. Some Nordics covereds.

Don’t hesitate to exchange with the author. All comments, suggestions, rants are welcome.

On the week (compared to Fri 26 Oct COB):
10 YRS Yields: Germany 1,45% (-9); Luxembourg 1,59% (-5); Netherlands 1,70% (-8); Finland 1,72% (-4); Swaps 1,77% (-4); EU 1,83% (-6); Austria 1,95% (-6); EIB 2,00% (-5); EFSF 2,10% (-8); France 2,22% (-3); Belgium 2,42% (-3); Italy 4,93% (+4); Spain 5,64% (+7).

10 YRS Spreads: Luxembourg 14bp (+4); Netherlands 25bp (+1); Finland 27bp (+5); Swaps 32bp (+5); EU 38bp (+3); Austria 50bp (+3); EIB 55bp (-10); EFSF 65bp (+1); France 77bp (+6); Belgium 97bp (+6); Italy 348bp (+13); Spain 419bp (+16).

EUR swap curve: 2-5 YRS 51bp (unch); 5-10 YRS 82bp (unch); 10-30 YRS 58bp (unch).
2 YRS German BKOs closed 0,003% (-5) and 5 YRS OBLs 0,46% (-8), on the week, with UST at 1,72% (-5). Hey, look who’s flirting with the 0.000% again!
Swiss 2-years tightening to -0.235% from -0.215, but again underperforming German Schätze.

Main at 128 from 129 (0,8% tighter); Financials at 172 after 175 (1,7% tighter). Cross at 514 from 535 (3.9% tighter).
Stoxx Futures at 2540 / +1,8% from 2494 with S&P minis at 1420 / +1,2% from 1403, at European COB last week.
VIX index at 16,6 after 18,5 last week.

Oil 85,4/106,5 (WTI/Brent) from 86,1/109,3 (-0,8%/-2,6%). Gold at 1676 after 1714 (-2,2%). Copper at 348 from 355 (-2,0%) . CRB closes 292,0 from 298,0 (-2,0%).
BDY retreated to 986 below the 4-digit mark broken 10 days ago, down 6% from 1049 and 11% from 1109 spike a fortnight ago. All iPads and Xmas presents now shipped???
Summer rebound peak had been 1162 early July (17.8% away). Feb low of 647 (34% away). Sep low was 661.

EUR 1,284 after 1,294 last Friday

Greek guesstimate: Closing the week much wider at 18% from 17% and 15.75% from 15% (in yield) in 2023s and 2042s. The SOMEHOW.GREECE.WILL.BE.SAVED.-mantra fast becoming a hoarse whisper...

All levels Friday COB 17:30 CET

Fast-forward Macro and Events:
Not much exciting data. German Factory orders to name one on Tue. ECB on Thursday, of course.
Uninspiring, supply-wise. Usual Core bills. German 5 YRS on Wed. Spanish bonds on Thursday, always good for some excitement.
US 3 YRS on Tue, 10 YRS on Wed and 30 YRS on Thu.

US elections, of course. Chinese Party Congress - pre-decided. No hanging chads to be expected.

EZ: Mon Sentix Confidence fcst -21 after -22.2; Tue Final Oct PMI Composite 45.8 and Services 46.2, PPI fcst 2.6% after 2.7%; Wed Retail Sales fcst -0.1% MoM /-0.8% YoY after +0.1%/-1.3%; Thu ECB
GE: Tue Factory Orders fcst -0.5% MoM after -1.3% MoM (-4.8% YoY); Wed IP fcst-0.6% after -0.5%; Thu Trade with Exports fcst -1.5% MoM after +2.5% and Imports fcst -0.4% after 0.4%; Fri CPI fcst unch 2.1% YoY.
FR: Fri Biz Sentiment (last 92), IP fcst -1% MoM /-0.1% YoY after +1.5% /-0.9%, MfG fcst -1.3% MoM/-0.1% after +1.8%/-0.4%
Italy: Fri IP fcst -1.6% MoM/-4.7% YoY after +1.7% /-5.2%
Spain: Mon Unemployment; Wed IP fcst -3.5% YoY after -3.2%
US: Mon ISM fcst 54.5 after 55.1; Thu Trade Balance, Claims; Fri U Michigan Conf, Wholesale Inventories, Import PX
China: Fri monthly data dump CPI, IP, Retail Sales; Sat Trade

Click link under title or below for today’s musical support:
Big Disconnect.
Music Link

http://www.aviewfrommyscreens.com

Don’t hesitate to exchange with the author. All comments, suggestions, rants are welcome.