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DAILY US OPENING NEWS - 30/03/11

 

 

·   UK’s ONS said that measures announced in the UK budget will add 0.29% to the CPI

 

·   ECB allotted EUR 129.458bln in its 91-day refinancing operation vs. Exp. EUR 140bln

 

·   There was market talk of the PBOC hiking the interest rate, however no such action has materialised so far in the session

 

·   According to Diario Economico, Brazil is considering the possibility of the purchase of Portuguese sovereign debt

 

·   RANsquawk EU Morning Briefing Video: http://www.youtube.com/watch?v=wLDB_ATvyEc

 

Market Re-Cap

 

In the forex market, GBP/USD received a boost following comments from UK’s ONS that measures announced in the UK budget will add 0.29% to the CPI, allied with much higher than expected CBI Distributive Trades data. ONS comments also weighed upon short sterling and Gilt futures. In other news, an uptick was observed in EUR/USD after news emerged that Brazil is looking at Portuguese government debt purchase, as well as lower than expected allocation in ECB’s 91-day refinancing operation. Elsewhere, European equities traded higher during the session partly on the back of higher closes to US and Asian equities. It is also worth noting that there have been market talk of a rate hike by the PBOC, with an ex-PBOC vice governor saying that China reserve requirement ratio still has room to rise, although no such action has materialised so far in today’s session.

 

Moving forward, markets look ahead to key jobs and employment figures from the US later in the session, allied with USD 29bln 7-year Note auction, and Fed’s Outright Treasury Coupon Purchase operation in the maturity range of Oct’13-Feb’15, with a purchase target of USD 5.5-7.5bln.

 

Asian Headlines

 

Japan’s government is likely to compile a first emergency budget of JPY 2trl and will aim to submit it to parliament in April.  The government likely will need to compile a second and third extra budgets for disaster relief, and total spending may exceed JPY10trl, the paper said without citing sources. (Nikkei)

 

Elsewhere, the PBOC may raise interest rates once or twice in the second quarter, according to the corporate Bank of China economists. They also said that the room for more increases in the reserve requirement ratio is limited. (Sources)

 

·   Japan Industrial Production (Feb) M/M 0.4% VS Exp -0.1% (Prev 1.3%)

·   Japan Industrial Production (Feb) Y/Y 2.8% vs. Exp 4.0% (Prev 3.5%) (RTRS)

 

US Headlines:

 

Fed’s Fisher said he would vote against any further monetary easing by the central bank after the current programme is finished in June. (RTRS)

 

In other news, Alan Greenspan, the former Federal Reserve chairman, has attacked the Dodd Frank financial reforms, warning they could create the “largest regulatory induced market distortion” in the US the imposition of wage and price controls in 1971. (FT - More)

 

·   US Challenger Job Cuts (Mar) Y/Y 41.5K vs. Prev. 50.7K

·   US MBA Mortgage Application (Mar 25) W/W -7.5% vs. Prev 2.7% (RTRS)

 

BarCap Month End Extensions: US Treasury +0.07

 

EU and UK Headlines:

 

According to UK’s Office for National Statistics (NASDAQ:ONS), measures announced in UK’s budget will add 0.29% to the CPI and 0.37% to the RPI. It further said the biggest impact would come from a rise in tobacco duty, with the increase in alcohol duty also having a significant impact. (RTRS)

 

 

 

·   Eurozone Business Climate Indicator (Mar) M/M 1.41 vs. Exp. 1.42 (Prev. 1.45, Rev. to 1.46)

·   Eurozone Consumer Confidence (Mar F) M/M -10.6 vs. Exp. -10.6 (Prev. -10.6)

·   UK CBI Distributive Trades (Mar) M/M 15 vs. Exp. 0 (Prev. 6)

 

·   Italian BTP auction for EUR4.465bln, 3% 01-Apr-14, bid/cover 1.302 (Prev. 3.24%)

·   Italian BTP auction for EUR 3.25bln, 4.75% 01-Sep-21, bid/cover 1.5 vs. Prev. 1.30 (yield 4.80% vs. Prev. 4.84%)

BarCap Month End Extensions: Europe +0.07, UK +0.23

 

EQUITIES

 

European equities traded higher partly on the back of higher closes in US and Asian equities, with particular strength seen in the Italian IBEX 35 Index. On the flip side, Nokia shares came under pressure partly after S&P cut co.’s long term rating. Moving into the North American open, equities continue to trade in positive territory, with basic materials and utilities as best performing sectors.

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

7047.36

4029.77

5964.06

2938.2

6409.73

Change (ticks)

112.92

41.97

31.89

27.27

54.67

 

FX

 

GBP/USD received a boost following comments from UK’s ONS that measures announced in the UK budget will add 0.29% to the CPI, allied with much higher than expected CBI Distributive Trades data. In other news, an uptick was observed in EUR/USD after news emerged that Brazil is looking at Portuguese government debt purchase, as well as lower than expected allocation in ECB’s 91-day refinancing operation.

 

Elsewhere, Japan’s ministry of finance said it expects further G7 intervention if JPY rises too sharply. (RTRS)

 

Currency

EURUSD

GBPUSD

USDJPY

Level

1.4090

1.6054

83.11

Change (pips)

-0.0023

0.0043

0.6300

 

COMMMODITIES

 

WTI crude futures eased overnight as an expected rise in US domestic crude stocks offset support from unrest in Libya and the Middle East.

 

Geopolitical News:

  • In Libya, Pro-Gaddafi forces retake Bin Jawad and oil town of Ras Lanuf.
  • President Obama said the objective of a US and allied campaign is to apply steady pressure on Gaddafi so that he will “ultimately step down” from power.  Obama said the United States has not ruled out providing military hardware to Libyan rebels.
  • Syrian president Bashar al-Assad is expected to unveil reforms in first public speech since security forces curbed anti-government protests according to Syrian news agency SANA.

 

Oil & Gas News:

  • According to the International Energy Agency, OPEC will reap USD 1,000bln in export revenues for the first time if oil prices remain above USD 100 per barrel.
  • Deutsche Bank raised its forecasts for WTI and Brent oil prices through 2011.  The bank boosted its prediction for WTI by 18% to USD 107.75 and Brent 16% to USD 117.50 for this year.
  • Saudi Arabia has embarked on an expansion of its oil industry, planning to increase the number of rigs by a quarter.  The number of rigs will go from 90-95 to 118.
  • According to a company official, Saudi Aramco sold three cargoes, totalling around 2mln barrels this month to OMV and BP to help overcome any shortages from Libya.
  • Iranian Oil Minister Mir-Kazemi says Iran plans to invest USD 90bln in South Pars gas and oil projects.  Once all phases of the South Pars field are complete the site will be able to produce 25mln cubic meters of natural gas and 40,000 barrels of liquefied natural gas per day.

 

Commodity

WTI Nymex

OTC Spot Gold

Level

104.33

1420.1

Change (NYSEARCA:USD)

-0.46

1.60

 

LOOKING AHEAD

 

Economic Releases

 

CDT

BST

 

DATA

EXP

PREV

0715

1315

US

ADP Employment Change M/M (Mar)

210K

217K

0730

1330

CA

Industrial Product Price M/M (Feb)

0.3%

0.2%

0730

1330

CA

Raw Materials Price Index M/M (Feb)

0.5%

0.3%

0930

1530

US

DOE Crude Oil Inventories W/W (Mar 25)

1500K

2131K

0930

1530

US

DOE Gasoline Inventories W/W (Mar 25)

-2000K

-5320K

0930

1530

US

DOE Distillate Inventory W/W (Mar 25)

-1000K

7K

0930

1530

US

DOE Cushing Crude Inventory W/W (Mar 25)

 

177K

0930

1530

US

DOE Refinery Utilisation W/W (Mar 25)

0.30%

0.70%

 

Speakers

0830

1430

UK

BOE’s Fisher

1200

1800

US

Fed’s Bullard

1300

1900

US

Fed’s Lacker

1330

1930

US

Fed’s Hoenig

 

Auctions

1000

1600

US

Fed’s Outright Trea. Coup. Purch. Oct’13-Feb’15 (USD 5.5-7.5bln)

1200

1800

US

USD 29bln 7y Note Auction

 

 

Prices taken at 1241BST

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liffe have announced an extension of their New Market Participants Scheme for selected futures contracts (Euribor, Short Sterling, Euroswiss, EONIA, Gilt, Euro Swapnote and FTSE) for a further 12 months from 1 April 2011 until 30 March 2012. This is for traders who are new to trading these contracts and is subject to a monthly cap. On a separate note NYSE Liffe have also announced an extension of their US Liquidity Provider Programme for US based traders of Euribor, Short Sterling and Euroswiss Futures for a further six months from 1 April 2011 until 30 September 2011. If you require any further information, please contact your LIFFE account manager.

 

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