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DAILY US OPENING NEWS - 09/09/11

 

·       Market participants noted a deadline for the Greek debt swap programme today, however its successful conclusion remained in doubt, which promoted risk-aversion

 

·       French bank shares witnessed particular underperformance, and shares of Societe Generale ventured below the level at the time of Lehman crisis

 

·       The IMF chief Lagarde said that some banks need additional capital and the risk of a liquidity crisis cannot be dismissed

 

·       CHF came under pressure across the board after the Swiss economy minister said that CHF is still massively overvalued

 

·       RANsquawk European Morning Briefing Video: http://www.youtube.com/watch?v=jv5gK0IAgE0

 

Market Re-Cap

 

Risk-aversion remained the predominant theme during the European session today, which weighed on equities and provided support to Bunds, with general widening seen in the Eurozone 10-year government bond yield spreads with respect to Bunds. Market participants noted a deadline for the Greek debt swap programme today, however its successful conclusion remained in doubt, which in turn weighed on financials. French bank shares witnessed particular underperformance, and shares of Societe Generale ventured below the level at the time of Lehman crisis. Comments from the IMF chief Lagarde, who said that some banks need additional capital and the risk of a liquidity crisis cannot be dismissed, exerted further downward pressure on banking shares. Elsewhere, strength in the USD-Index weighed upon EUR/USD, GBP/USD and commodity-linked currencies, whereas losses in GBP/USD were exacerbated after stops were triggered to the downside below the 1.5950 level. Also, CAD came under pressure across the board following an unexpected decline in the net change in employment data from Canada, and as the Canadian unemployment rate came out higher than expected. In other news, despite earlier gains, a sharp fall was observed in the Spot Gold after stops were triggered to the downside below the USD 1,865 per ounce level.

 

Moving into the North American open, markets look ahead to the wholesale inventories/sales data from the US together with another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Mar'17-Aug'18, with a purchase target of USD 2.75-3.50bln. Market participants will also keep a close eye on any developments related to the Greek debt swap programme.

 

Asian Headlines:

 

·       Japanese GDP (Q2 F) Q/Q -0.5% vs. Exp. -0.5% (Prev. -0.3%)

·       Japanese GDP Annualised (Q2 F) Q/Q -2.1% vs. Exp. -2.1% (Prev. -1.3%)

·       Chinese CPI (Aug) M/M 6.2% vs. Exp. 6.2% (Prev. 6.5%)

·       Chinese PPI (Aug) Y/Y 7.3% vs. Exp. 7.2% (Prev. 7.5%)

·       Chinese Industrial Production (Aug) Y/Y 13.5% vs. Exp. 13.7% (14.0%)

·       Chinese Retail Sales (Aug) Y/Y 17.0% vs. Exp. 17.0% (Prev. 17.2%) (RTRS)

 

US Headlines:

 

President Obama challenged Congress to enact a USD 447bln package of tax cuts and new spending to revive a stalled job market, but he faces an uphill fight to win over Republicans and restore public faith in his economic stewardship. Tax cuts for businesses and workers are at centre of jobs plan. (RTRS)

 

In other news, Fed’s balance sheet was USD 2.842tln in the week ending September 7th compared with USD 2.838tln in the week ending August 31st. Also foreign central banks’ overall holdings of US marketable securities at the Fed fell USD 10.78bln in the week ending September 7th to stand at USD 3.474tln. (RTRS)

 

EU and UK Headlines:

 

ECB’s Stark said the ECB stands ready to intervene in the bond market if its low interest rates are not translated into lending rates. “However, this is a temporary measure, not a permanent measure. Stark also said he was “very optimistic” on progress made in Ireland in addressing its fiscal problems, and that the ECB and the IMF have been very clear in their messages on what Greece needs to deliver. (RTRS)

 

·       Italian GDP SA and WDA (Q2 F) Q/Q 0.3% vs. Exp. 0.3% (Prev.0.3%)

·       Italian GDP SA and WDA (Q2 F) Y/Y 0.8% vs. Exp. 0.8% (Prev.0.8%)

·       UK PPI Input NSA (Aug) Y/Y 16.2% vs. Exp. 16.8% (Prev. 18.5%, Rev. 18.3%)

·       UK PPI Output NSA (Aug) Y/Y 6.1% vs. Exp. 5.9% (Prev. 5.9%, Rev. 6.1%)

·       UK PPI Output Core NSA (Aug) Y/Y 3.6% vs. Exp. 3.4% (Prev. 3.3%, Rev. 3.4%) (RTRS)

 

EQUITIES

 

Risk-aversion remained the predominant theme during the European session today, which weighed on equities. Market participants noted a deadline for the Greek debt swap programme today, however its successful conclusion remained in doubt, which in turn weighed on financials. French bank shares witnessed particular underperformance, and shares of Societe Generale ventured below the level at the time of Lehman crisis. Comments from the IMF chief Lagarde, who said that some banks need additional capital and the risk of a liquidity crisis cannot be dismissed, exerted further downward pressure on banking shares. Elsewhere, strength in the USD-Index weighed upon the basic materials sector. Moving into the North American open, equities continue to trade lower, with financials and industrials as the worst performing sector.

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

5349.16

3043.02

5298.27

2134.32

5514.91

Change (ticks)

-59.30

-42.81

-42.11

-29.08

-14

 

FX

 

Strength in the USD-Index weighed upon EUR/USD, GBP/USD and commodity-linked currencies, whereas losses in GBP/USD were exacerbated after stops were triggered to the downside below the 1.5950 level. Also, CAD came under pressure across the board following an unexpected decline in the net change in employment data from Canada, and as the Canadian unemployment rate came out higher than expected. In other forex news, CHF weakened across the board after the Swiss economy minister said that CHF is still massively overvalued.

 

Currency

EURUSD

GBPUSD

USDJPY

Level

1.3806

1.5941

77.78

Change (pips)

-0.0076

-0.0017

0.2700

 

COMMODITIES

 

Moving into the NYMEX pit open, WTI crude futures continued to move lower as the USD-Index strengthened amid risk-averse trade.

 

Oil & Gas News:

·       CME lowered NYMEX RBOB gasoline futures maintenance margins last night for speculators by 8.8% to USD 7,750 per contract from USD 8,500. CME also lowered Heating oil futures maintenance margins for specs by 10.3% to USD 6,500 per contract from USD 7,250.

 

Geopolitical News:

·       The man tasked with running the new Libya reminded his forces that the war was not yet over as the latest deadline for the surrender of pro-Muammar Gaddafi towns loomed and fighters massed on both sides.

·       President Bashar al-Assad’s opponents broke a taboo by appealing for foreign help to stop the killing of civilians ahead of Friday prayers that has regularly seen some of Syria’s worse bloodshed in six months of pro-democracy protests.

 

Commodity

WTI Nymex

OTC Spot Gold

Level

88.04

1831.51

Change (NYSEARCA:USD)

-1.01

-38.67

 

LOOKING AHEAD

 

Economic Releases

 

CDT

BST

 

DATA

EXP

PREV

0715

1315

CA

Housing Starts M/M (Aug)

200.0K

205.1K

0730

1330

CA

Labour Productivity Q/Q (Q2)

-0.7%

0.4%

0900

1500

US

Wholesale Inventories M/M (Jul)

0.7%

0.6%

0900

1500

US

Wholesale Sales M/M (Jul)

0.8%

0.6%

0930

1530

US

ECRI Weekly Index W/W (Sep 9)

 

122.5

0930

1530

US

ECRI Weekly Annualised Y/Y (Sep 9)

 

-4.3%

1200

1800

US

Baker Hughes Rig Count W/W (Sep 9)

 

1968

 

Speakers

0800

1400

GE

Chancellor Merkel

1030

1630

US

Fed’s Williams (Non-Voting Member)

1100

1700

EU

European Council’s President Van Rompuy

1100

1700

US

Secretary of State Clinton

N/A

N/A

EU

European Commission’s President Barroso

N/A

N/A

CA

Bank of Canada Governor Carney

N/A

N/A

WLD

G7 Finance Ministers’ Meeting

 

Auction

1000

1600

US

Fed’s Outright Trea. Coup. Purch. Mar’17-Aug’18 (USD 2.75-3.50bln)

 

Earnings

US

Kroger

 

**Note: NYMEX/COMEX markets on CME Globex will observe voluntary moments of silence, observing the tenth anniversary of the attacks on the World Trade Centre, at 0846 ET, 0903 ET, 0959ET, and 1029ET.

 

Prices taken at 1253BST