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DAILY US OPENING NEWS - 04/02/11

 

 

  • The nonfarm payroll figure from the US to be released later remains the main focus today, where most analysts believe that more jobs have been created than lost in the month of January

 

  • GBP gained strength across the board following better than expected Halifax House Prices data from the UK, however pared gains on profit-taking as the session progressed

 

  • Markets are keeping a close eye on the one-day EU Council meeting for further information related to the EFSF fund, however no concrete decisions are expected before the end of March

 

 

Market Re-Cap

 

The nonfarm payroll figure from the US to be released later remains the main focus today, where most analysts believe that more jobs have been created than lost in the month of January. As such both news flow and volumes have been very light. Elsewhere, bund futures traded lower during the session, with European peripheral 10-year government bond yield spreads with respect to bunds tighter across the board. It is worth noting that markets will keep a close eye on the one-day EU Council meeting for further information related to the EFSF fund, however no concrete decisions are expected before the end of March.

 

Moving forward, apart from the US nonfarm data, markets look ahead to the Canadian employment figures to be released at 1200 GMT, as well as another Fed's Outright Treasury Coupon Purchase in the maturity range of Aug'13 - Jan'15, with a purchase target of USD 6-8bln.

 

US Headlines

 

Fed’s Kocherlakota said headwinds stemming from the collapse of the housing bubble will hold back the US economy this year, keeping growth close to 3% than 4%, adding that he sees jobless rate still above 8% in 2012. However, he is optimistic that inflation will rise this year to about 1.5%. He further said that he is not worried that current policy environment is creating bubbles. (RTRS/Sources)

 

In other news, Treasury Secretary Geithner said the government can’t “prioritize” debt service payments above other legal obligations for purposes of the statutory debt limit. (Sources)

 

Elsewhere, Fed’s balance sheet grew to USD 2.452trl in the week ended February 2nd from USD 2.426trl the prior week. Also, foreign central banks’ overall holdings of US securities rose by USD 5.926bln in the week ended February 2nd to stand at USD 3.359trl. (RTRS)

 

·   US Monster Employment Index (Jan) M/M 122 vs. Prev. 130 (Sources)

 

EU and UK Headlines:

 

According to an EU source, the EU summit won't agree details of the EFSF overhaul, adding that the EU leaders will commit to concrete proposals for the EFSF by March. The source further said that several countries are still pushing for the Portugal bailout, and the EU leaders are still at odds over whether the EFSF will buy government debt. (Sources)

 

In other news, ECB’s Gonzalez-Paramo declined to comment on market expectations of an ECB rate hike by September, adding that it is highly likely that the ECB could phase out bond buy programme if the EFSF measures normalise market. He further said that ECB will monitor all inflation developments to avoid second-round effects, and the ECB has all the levers needed to avoid banks being addicted to ECB funds. (RTRS)

 

Elsewhere, former BOE policy maker Kate Barker said the BOE may have suffered a setback to its inflation-fighting credibility as it struggles to contain inflation that has accelerated to almost twice its 2% target. (Sources)

 

·   UK Halifax House Prices SA (Jan) M/M 0.8% vs. Exp. -0.3% (Prev. -1.3%)

·   UK Halifax House Prices (Jan) 3M/Y -2.4% vs. Exp. -3.0% (Prev. -1.6%) (RTRS)

 

 

 

 

EQUITIES

 

European equities traded in positive territory for the majority of the European session ahead of the nonfarm payroll data from the US due later in the session. Financials performed particularly well partly due to an upgrade of banks by Goldman, however Santander and BBVA underperformed their European peers after getting downgraded by Deutsche Bank. Moving into the North American open, equities continue to trade higher with financials and telecommunications being the best performing sectors.

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

7212.74

4049.98

6004.3

3005.84

6579.76

Change (ticks)

19.06

13.39

20.96

10.35

34.85

 

FX

 

GBP gained across the board after better than expected Halifax House Prices data from the UK, which saw GBP/USD rise more than 25 pips, however as the session progressed the pair pared back earlier gains and ventured into negative territory due to profit taking, given a near 3% rise seen this week. In other news, strength was seen in the AUD following comments from the Reserve Bank of Australia, who raised the 2011 annual GDP forecast for Australia to 4.25% from a previous estimate of 3.75%.

 

Currency

EURUSD

GBPUSD

USDJPY

Level

1.3629

1.6124

81.63

Change (pips)

-0.0005

-0.0012

0.0000

 

COMMMODITIES

 

WTI crude futures remained flat around the USD 91 handle; concerns remain over unrest in Arab countries and a cut in natural gas production in the US due to cold weather.

 

Oil & Gas News:

·  OPEC Secretary General Al-Badri said current oil prices of USD 100 a barrel are ‘abnormal’ and will come down in the weeks ahead. Al-Badri added he does not believe the current price of USD 100 a barrel will affect world economic growth.

 

Geopolitical News:

·   Iran’s Supreme Leader says the US faces ‘irreparable defeat’ if the Middle-East uprisings are successful. He also claims the Egyptian uprising is an ‘Islamic liberation movement’.

·   Today’s Friday prayers in Egypt threaten to bring further violence after pro-government protesters turned on foreign journalists and President Mubarak’s refusal to quit with immediate effect.

·   The Obama administration is discussing with Egyptian officials the immediate resignation of President Hosni Mubarak as one of several scenarios for a transition of power, according to a US official.

·   According to a draft statement, EU leaders won't call for Mubarak resignation.

·   Egyptian President Hosni Mubarak told U.S broadcaster ABC yesterday that he wants to resign but fears Egypt will sink into chaos if he does.

 

Commodity

WTI Nymex

OTC Spot Gold

Level

90.67

1349.6

Change (NYSEARCA:USD)

0.13

-4.75

 

 

 

 

 

 

 

 

LOOKING AHEAD

 

Economic Releases

 

CST

GMT

 

DATA

EXP

PREV

0600

1200

CA

Unemployment Rate M/M (Jan)

7.6%

7.6%

0600

1200

CA

Net Change in Employment M/M (Jan)

15.0K

22.0K

0730

1330

US

Change in Nonfarm Payrolls M/M (Jan)

143K

103K

0730

1330

US

Change in Manufacturing Payrolls M/M (Jan)

10K

10K

0730

1330

US

Change in Private Payrolls M/M (Jan)

140K

113K

0730

1330

US

Unemployment Rate M/M (Jan)

9.5%

9.4%

0730

1330

US

Average Hourly Earnings M/M (Jan)

0.2%

0.1%

0730

1330

US

Average Hourly Earnings Y/Y (Jan)

1.7%

1.8%

0730

1330

US

Average Weekly Hours M/M (Jan)

34.3

34.3

0840

1440

US

ECRI Inflation M/M (Jan)

 

100.7

0840

1440

US

ECRI Monthly Annualised Y/Y (Jan)

 

3.1%

0900

1500

CA

Ivey PMI M/M (Jan)

53.3

50.0

0930

1530

US

ECRI Weekly W/W (Feb 4)

 

127.5

0930

1530

US

ECRI Weekly Annualised Y/Y (Feb 4)

 

3.5%

1200

1800

US

Baker Hughes Rig Count W/W (Feb 4)

 

1732

 

Speakers

1030

1630

EU

German Chancellor Merkel

1200

1800

US

Fed’s Fisher

N/A

N/A

EU

EU Council Meeting in Brussels

 

Auction

1200

1600

US

Fed’s Outright Treasury Coupon Purchase Aug 2013 – Jan 2015 (USD 6-8bln)

 

Earnings

US

Pulte Group

 

** Notes: Chinese Market Holiday

 

Prices taken at 1149GMT

 

 

 

 

 

 

 

 

 

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1. The liquidity provider programme in EONIA swap index futures has been extended to 31 March 2011.

2. The designated market maker (DMM) programme is being renewed for EURIBOR & SHORT STERLING and the respective mid curve options

For more information on either schemes or if you wish to apply please email stirs@liffe.com and mention RANsquawk.

 

NYSE LIFFE: A record month in Euribor® packs and bundles and Short Sterling packs

 

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