DAILY US OPENING NEWS - 13/04/11
Macro
Seeking Alpha Analyst Since 2008
· S&P said it sees a 1 in 3 chance of Greek debt restructuring, however it sees Irish debt restructuring very unlikely
· Portuguese opposition leader said that the country needs additional austerity measures
· China State Council said it will use reserve requirement ratio and interest rates as monetary policy tools
· RANsquawk EU Morning Briefing Video: http://youtu.be/xSWDry5zTOI
Market Re-Cap
Overnight, Nikkei closed up 0.9%, which provided a boost to European bourses to trade higher during the session, and further positive sentiment was observed in the market after strong quarterly earnings release from JPMorgan. Strength in equities weighed upon bund futures, which traded lower during the session, however the Portuguese/German 10-year government bond yield spread widened partly on the back of comments from Portuguese opposition leader that the country needs additional austerity measures, whereas the Greek/German spread widened after S&P said that there exists a 1 in 3 chance of a Greek debt restructuring. Elsewhere, WTI crude futures traded in positive territory for most of the European session as geopolitical tension in the MENA region continued, allied with weakness in the USD-index.
Moving ahead, markets look forward to key economic data from the US in the form of retail sales, business inventories, DOE inventories as well as the Beige Book report. In fixed income, another Fed's outright Treasury Coupon Purchase operation is scheduled in the maturity range of Oct'12 - Sep'13, with a purchase target of USD 4-6bln, allied with USD 21bln 10-year note auction. We also have a number of ECB speakers scheduled for later in the session.
Asian Headlines
The Japanese government cut its economic assessment for the first time in six months. (RTRS)
Elsewhere, according to China’s State Information Office, Fan Jianping, China will use rates and currency control to curb inflation, adding that the country may raise interest rates once or twice in the second quarter of 2011. He also said that China March inflation will be from 3% to 5%. In other news, according to an economist at Credit Agricole, China may increase banks’ reserve requirement ratios by a half-percentage point as early as April 15th or by the end of the month. (Economic Information Daily/Sources)
US Headlines:
Fed’s Bullard said the Fed has yet to decide how it will start to reverse its unprecedented rescue of the US economy and is likely to take several months before making its first moves. He further said that the Fed was looking at launching its exit strategy by raising its near-zero interest rates or selling some of the nearly USD 2trl in bonds it has amassed, adding that doing both at the same time was possible too. Also, Fed’s Fisher said he sees risk of inflation getting out of control, and sees risk of too expansive US monetary policy. (RTRS/Sources)
In other news, White House said President Obama deficit speech will lay out four steps to restore US fiscal position, and will include tax reform. It further said that Obama will also seek deficit savings from US defence budget, domestic spending and healthcare. Obama is due to deliver his speech at 1735 GMT. Meanwhile, Republican leaders in Congress said they may stretch out negotiations on raising the US debt limit until July, when Washington will be close to defaulting on its obligations. (RTRS)
EU and UK Headlines:
S&P said it sees a 1 in 3 chance of Greek debt restructuring, however it sees Irish debt restructuring very unlikely. It also said that Portuguese situation is less dramatic than Greek. (Zeit)
· Eurozone Industrial Production SA (Feb) M/M 0.4% vs. Exp. 0.8% (Prev. 0.3%, Rev. to 0.2%)
· Eurozone Industrial Production WDA (Feb) Y/Y 7.3% vs. Exp. 8.0% (Prev. 6.6%, Rev. to 6.3%)
· UK Jobless Claims Change (Mar) M/M 0.7K vs. Exp. -3.0K (Prev. -10.2K, Rev. to -8.5K)
· UK ILO Unemployment Rate (Feb) 3M/Y 7.8% vs. Exp. 8.0% (Prev. 8.0%), first fall since July-September 2010
· UK Claimant Count Rate (Mar) M/M 4.5% vs. Exp. 4.5% (Prev. 4.5%) (RTRS)
· German bond auction for EUR 1.674bln, 3.25% 04-Jul-42, bid/cover 1.5 vs. Prev. 1.2 (yield 3.93% vs. Prev. 3.58%), retention 16.3% vs. Prev. 19.22%
· UK Conventional Gilt auction for GBP 5bln, 2.0% Jan'16, bid/cover 1.82 vs. Prev. 1.79 (RTRS)
EQUITIES
Overnight, Nikkei closed up 0.9%, which provided a boost to European bourses to trade higher during the session, and further positive sentiment was observed in the market after strong quarterly earnings release from JPMorgan. In equity specific news, Alcatel Lucent shares rose over 5% following a broker upgrade. Moving into the North American open, equities continue to trade higher with technology and industrials as best performing sectors.
JPMorgan – Co.’s Q1 EPS USD 1.28 vs. Exp. USD 1.15, and Q1 revenue USD 25.8bln vs. Exp. USD 25.11bln. Co. said it will buyback shares worth up to USD 15bln, adding that it will buyback shares worth USD 8bln for 2011. (RTRS)
Index | DAX | CAC | FTSE | EUROSTOXX | SMI |
Level | 7190.67 | 4026.02 | 6039.78 | 2963.68 | 6400.62 |
Change (ticks) | 87.76 | 49.42 | 75.31 | 31.35 | 49.02 |
FX
EUR/USD demonstrated strength during the European session partly due to weakness in the USD-index, however as the European session progressed, price action settled around the 1.4500 option expiry level.
Currency | EURUSD | GBPUSD | USDJPY |
Level | 1.4513 | 1.6287 | 84.08 |
Change (pips) | 0.0036 | 0.0029 | 0.5000 |
COMMODITIES
WTI crude futures traded in positive territory for most of the European session as geopolitical tension in the MENA region continued, allied with weakness in the USD-index. However, prices did come under some pressure after the African Union said that it is trying to convince Libyan rebels to join the ceasefire.
Oil & Gas News:
· Bank of America sees Brent crude oil prices to average USD 122 per barrel in 2011, adding that it believes that prices could briefly break through USD 140 per barrel in the next three months. It sees 2011 WTI crude oil at USD 101 per barrel, and sees 2011 Brent crude oil at 108 per barrel.
· Kuwait temporarily halted oil exports due to bad weather, according to a spokesman for the oil sector.
Geopolitical News:
· A Libyan rebel spokesman said that it will not consider any peace plan that includes Gaddafi, adding that countries involved in coalition are looking into arming rebels. He said that rebels are exporting minimal amount of oil, and producing 100,000 BPD, however they want to export as much oil as possible. He also said that rebel leaders will go to Washington this week to meet US officials, adding that rebels have positive view on Turkish initiative for peace plan.
· However, Belgian foreign minister said there is no case for arming civilians in Libya according to UN rules, adding that he sees no need to boost ministry presence in Libya.
· Meanwhile, an African Union spokesman said that seeking international mechanism to oversee the Libyan ceasefire, and he is hopeful it can be achieved in days or hours. He also said that the African Union is trying to convince rebels in Benghazi to join the ceasefire in Libya.
· Also, NATO said a third of Gaddafi’s military capacity has now been destroyed.
Commodity | WTI Nymex | OTC Spot Gold |
Level | 106.72 | 1460.88 |
Change (USD) | 0.47 | 7.78 |
LOOKING AHEAD
Economic Releases
CDT | BST |
| DATA | EXP | PREV |
0730 | 1330 | US | Advanced Retail Sales M/M (Mar) | 0.5% | 1.0% |
0730 | 1330 | US | Retail Sales Less Autos M/M (Mar) | 0.7% | 0.7% |
0730 | 1330 | US | Retail Sales ex. Auto & Gas M/M (Mar) | 0.5% | 0.6% |
0800 | 1400 | WLD | IMF Global Financial Stability Report |
|
|
0900 | 1500 | US | Business Inventories M/M (Feb) | 0.8% | 0.9% |
0900 | 1500 | US | JOLTs Job Openings M/M (Feb) |
| 2760 |
0930 | 1530 | US | DOE Crude Oil Inventories W/W (Apr 8) | 1000K | 1952K |
0930 | 1530 | US | DOE Gasoline Inventories W/W (Apr 8) | -850K | -357K |
0930 | 1530 | US | DOE Distillate Inventory W/W (Apr 8) | 500K | 195K |
0930 | 1530 | US | DOE Cushing Crude Inventory W/W (Apr 8) |
| -16K |
0930 | 1530 | US | DOE Refinery Utilisation W/W (Apr 8) | 0.45% | 0.30% |
0930 | 1530 | CA | Monetary Policy Report |
|
|
1300 | 1900 | US | Fed’s Beige Book |
|
|
1730 | 2330 | NZ | Business PMI M/M (Mar) |
| 50.8 |
| |||||
Speakers | |||||
0700 | 1300 | EU | ECB’s Mersch | ||
0800 | 1400 | EU | ECB’s Tumpel-Gugerell | ||
0830 | 1430 | EU | ECB’s Draghi | ||
1200 | 1800 | EU | ECB’s Stark | ||
1200 | 1800 | AU | RBA’s Governor Stevens | ||
1600 | 2200 | EU | ECB’s Weber | ||
1600 | 2200 | US | Fed’s Bullard | ||
1700 | 2300 | UK | BOE’s Posen | ||
| |||||
Auctions | |||||
1000 | 1600 | US | Fed Outright Coupon Purchase Oct’12 – Sep’13 (USD 4-6bln) | ||
1200 | 1800 | US | USD 21bln 10y Note Auction | ||
Prices taken at 1248BST
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