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DAILY US OPENING NEWS - 28/01/11

 

 

  • Markets look ahead to the fourth quarter advanced GDP figure from the US later in the session

 

  • EU has confirmed that any plan for new Greek loan in order to buy back debt is 'on the table'. Also, French finance minister Lagarde said using Eurozone fund to buy bonds is an option

 

  • Greek finance minister said his country would like to return to debt markets this year

 

 

Market Re-Cap

 

The focus of markets today remained on the fourth quarter advanced GDP data from the US later in the session. European equities opened in negative territory, however as the session progressed, prices recovered from earlier losses and ventured into positive territory, led by the Spanish IBEX 35 and Italian FTSE MIB indices, on the back of outperformance seen in financials. Bunds traded in positive territory for most of the session, and Gilts also traded higher partly due to a record fall in the GfK consumer confidence from the UK, which also weighed upon GBP. In terms of the European peripheral 10-year government bond yield spreads, the Italian/German spread tightened leading upto and after a well received BTAN auction from Italy, whereas the Irish/German spread tightened following comments from the Irish PM that he would dissolve the parliament on Tuesday, clearing the way for the next general election.

 

Moving forward, apart from the US GDP figure, the market looks ahead to US corporate earnings from Chevron, allied with another Fed’s Outright Treasury Coupon purchase operation in the maturity range of Feb’18 – Nov’20, with a target purchase range of USD 7-9bln.

 

Asia Headlines

 

Many BOJ board members said a recent rise in long-term interest rates was making it difficult to see the effects of the bank’s comprehensive monetary easing, minutes of the bank’s Dec. 20-21 meeting showed. Many board members also said a rise in global commodity prices may affect Japan’s consumer prices. (RTRS)

 

·   Japan Jobless Rate (Dec) M/M 4.9% vs. Exp. 5.1% (Prev. 5.1%)

·   Japan CPI (Dec) Y/Y 0.0% vs. Exp. -0.1% (Prev. 0.1%) (RTRS)

 

US Headlines

 

According to Pimco’s Bill Gross, Treasuries are poised to fall as the battle over the US debt limit intensifies. He added that the fight over raising the country’s debt limit is the wrong way to do it. (NYSE:AP)

 

In other news, the US Fed’s balance sheet expanded to USD 2.426trl in the week ended Jan. 26 from USD 2.407trl the prior week. Also, foreign central banks’ overall holdings of US marketable securities at the Fed rose by USD 5.297bln in the week ended Jan. 26 to stand at USD 3.353trl. (RTRS)

 

EU and UK Headlines:

 

EU's Rehn has said changes to the EFSF could include widening its scope of operations. That new scope could allow the EFSF to lend Greece money to repurchase between EUR 50-60bln in bonds lodged with the ECB, according to officials familiar with the discussions. In latest news, EU has confirmed that any plan for new Greek loan in order to buy back debt is 'on the table'. (WSJ/Sources)

 

·   Italian BTP Auction for EUR 3.5bln, 2.25% 1-Nov-13, bid/cover 1.399 vs. Prev. 1.39 (yield 4.73% vs. Prev. 3.25%)

·   Italian BTP Auction for EUR 3.25bln, 3.75% 1-Mar-21, bid/cover 1.454 vs. Prev 1.29 (yield 3.12% vs. Prev. 4.80%%) (RTRS)

 

·   UK GfK Consumer Confidence (Jan) M/M -29 vs. Exp. -22 (Prev. -21) (RTRS)

 

 

 

 

 

 

EQUITIES

 

European equities opened lower, however, as the session progressed, prices pared back earlier losses and ventured into positive territory, led by the Spanish IBEX 35, and Italian FTSE MIB indices, on the back of strength in the financial sector, however the FTSE 100 index underperformed its European peers primarily due to the weakness in the miners.  In equity specific news, Sanofi-Aventis shares demonstrated weakness after one of its key breast cancer treatment in the development pipeline failed to meet its goals in a phase 3 study. Moving into the North American open, most European indices are trading in positive territory, with financials and utilities as the best performing sectors.

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

7171.96

4070.07

5919.56

3000.99

6585.22

Change (ticks)

16.38

10.50

-45.52

11.24

22.86

 

FX

 

GBP came under pressure following a record fall in the GfK consumer confidence data from the UK, however as the session progressed and the USD-index came off its best levels, GBP/USD pared back much of the earlier losses, allied with the Citi/YouGov survey indicating a rise in UK’s January CPI expectations to 3.6% vs. previous expectation of 3.5%. In other news, USD/JPY fell to session low after stops to the downside were triggered on the break of 82.60.

 

Currency

EURUSD

GBPUSD

USDJPY

Level

1.3734

1.5952

82.23

Change (pips)

0.0000

0.0023

-0.6900

 

COMMMODITIES

 

WTI crude futures are trading slightly higher ahead of the US Advance Q4 GDP at 1330 GMT and Chevron’s earnings at 1230 GMT.

 

Oil & Gas News:

·   OPEC will have to raise oil prices in coming years to maximise revenue even as it acts to quell WTI crude’s rally toward USD 100 a barrel in the short term, according to JPMorgan.

·   OPEC Secretary-General Abdulla El-Badri said he sees a 2011 demand increase to 1.2mln BPD, commenting that he doesn’t see a shortage in supply or a need to interfere in the market. El-Badri also foresees further USD weakness.

·   Iran has no plans to cut oil supplies to India currently, with India looking to resolve an oil payment issue with Iran in early Feb 2011.

·   BP’s Chairman Svanberg see growing oil demand from coming from emerging markets adding that oil at USD 65-90 is an ‘okay’ range.

·   Royal Dutch Shell’s Chief Executive Voser believes current high oil process may hinder global recovery, adding that China will continue to drive demand and sees rising oil prices in the longer term.

 

Geopolitical News:

·   Russian Prime Minister Medvedev has signed the nuclear arms treaty with the US. The upper house of the Russian Parliament approved the New START treaty signed by Medvedev and Obama in Prague on April 8, 2010.

 

Commodity

WTI Nymex

OTC Spot Gold

Level

85.89

1313.63

Change (NYSEARCA:USD)

0.25

-0.30

 

 

 

 

 

 

 

 

 

LOOKING AHEAD

 

Economic Releases

 

CST

GMT

 

DATA

EXP

PREV

0730

1330

US

GDP (Annualised) Q/Q (4Q A)

3.5%

2.6%

0730

1330

US

GDP Price Index Q/Q (Q4 A)

1.6%

2.1%

0730

1330

US

Core PCE Q/Q (Q4 A)

0.4%

0.5%

0730

1330

US

Personal Consumption Q/Q (Q4 A)

4.0%

2.4%

0730

1330

US

Employment Cost Index Q/Q (Q4)

0.5%

0.4%

0855

1455

US

Uni. of Michigan Confidence M/M (Jan F)

73.3

72.7

0930

1530

US

ECRI Weekly W/W (Jan 28)

 

128.9

0930

1530

US

ECRI Weekly Annualised Y/Y (Jan 28)

 

4.1%

1200

1800

US

Baker Hughes US Rig Count W/W (Jan 28)

 

1713

 

Auction

1000

1600

US

Fed’s Outright Treasury Coupon Purchase Feb 2018 – Nov 2020 (USD 7-9bln)

 

Earnings

US

Chevron, Honeywell

 

 

Prices taken at 1209GMT