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DAILY US OPENING NEWS - 23/09/11

 

·       Finance ministers and central bank governors of the G20 countries pledged for a strong and coordinated international response to boost global economic recovery

 

·       ECB’s Coene said that the central bank may take action as soon as next month if the economic data continues to disappoint. However, he also said that giving EFSF bank license would not be a good idea. Meanwhile, ECB’s Knot said that a Greek default cannot be excluded

 

·       Kathimerini wrote that several Greek MP’s are resisting a new round of austerity

 

·       The Head of Finnish Parliament said that the use of new EFSF powers should always require parliament approval

 

·       Handelsblatt quoted a German economic professor saying that Germany has EUR 5trl of hidden debt, while Deutsche Bank said co.’s write downs on Greek bonds could be higher than the 21% level foreseen in a July agreement

 

·       RANsquawk European Morning Briefing Video: http://www.youtube.com/watch?v=otJj6lxwVQU

 

Market Re-Cap

 

Risk-aversion gathered pace, as the European session progressed, with market participants focusing on the ongoing Greek debt concerns. ECB's Knot said that a Greek default cannot be excluded, whereas ECB's Coene said that giving EFSF bank license would not be a good idea. Kathimerini wrote that several Greek MP's are resisting a new round of austerity, whereas the Head of Finnish Parliament said that the use of new EFSF powers should always require parliament approval. Meanwhile, Handelsblatt quoted a German economic professor saying that Germany has EUR 5trl of hidden debt, while Deutsche Bank said co.'s write downs on Greek bonds could be higher than the 21% level foreseen in a July agreement. In forex news, EUR/USD, GBP/USD and commodity-linked currencies came off their best levels as the European session progressed and the USD-Index gained strength.

 

Moving into the North American open, the economic calendar remains thin, however markets will keep a close eye on developments relevant to the Eurozone debt crisis. In fixed income, another Fed's Outright Treasury Coupon Purchase operation in the maturity range of Nov'21-Aug'41, with a purchase target of USD 0.5-1.25bln is also scheduled.

 

Asian Headlines:

 

Japanese market holiday.

 

US Headlines:

 

Republicans in the US House of Representatives regrouped on Friday to approve a must-pass spending bill, but the prospect of a government shutdown loomed as Democrats said it would go nowhere in the Senate. (RTRS)

 

In other news, Fed’s balance sheet was USD 2.841trl on September 21st, compared with USD 2.847trl on September 14th. Also, foreign central banks’ overall holdings of US marketable securities at the Fed fell USD 6.882bln in the week ended September 21st to stand at USD 3.456trl. (RTRS)

 

 

EU and UK Headlines:

 

European officials look set to speed up plans to recapitalise the 16 banks that came close to failing last summer’s pan-EU stress tests as part of a co-ordinated effort to reassure the markets about the strength of the 27-nation bloc’s banking sector. A senior French official said the 16 banks regarded to be close to the threshold would now have to seek new funds immediately. Although there has been widespread speculation that French banks are seeking more capital, none is on the list. Other European officials said discussions were still under way. Separately, ECB’s Noyer said that French banks are able to handle a default by Greece on its sovereign debt. (FT - More/Sources)

 

EQUITIES

 

European equities came under pressure, as the European session progressed, as market participants focused on the ongoing Greek debt concerns, which weighed on financials. Strength in the USD-Index exerted downward pressure on commodities, which in turn resulted in declines in the basic materials and oil & gas sectors. In other news, Handelsblatt quoted a German economic professor saying that Germany has EUR 5trl of hidden debt, while Deutsche Bank said co.'s write downs on Greek bonds could be higher than the 21% level foreseen in a July agreement. Moving into the North American open, equities continue to trade lower with basic materials and industrials as the worst performing sectors.

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

5013.69

2707.51

4950.86

1950.44

5169.66

Change (ticks)

-150.52

-74.17

-90.75

-45.31

-118.82

 

FX

 

EUR/USD, GBP/USD and commodity-linked currencies came off their best levels as the European session progressed and the USD-Index gained strength.

 

In other news, the RBA said the domestic banks are well capitalised and funded, however they need to be prudent given slower credit growth. Meanwhile, S&P affirmed Australia’s AAA sovereign rating, with a stable outlook. (RTRS)

 

Currency

EURUSD

GBPUSD

USDJPY

Level

1.3440

1.5419

76.27

Change (pips)

-0.0025

0.0076

0.0300

 

COMMODITIES

 

Moving into the NYMEX pit open WTI and Brent crude futures traded lower as the USD-index strengthened and Eurozone debt concerns continued.

 

Oil & Gas News:

·       A substation fire knocked out power to Texas refineries according to local media.

·       Syria is missing crude oil deliveries this month because of EU sanctions, according to two people with direct knowledge of the matter.

·       Indian refiners processed about 3.32 MBPD crude in August, up 3.9% Y/Y, and Natural gas output down 5.3% Y/Y at 4.1bln cubic meters.

·       Libya’s Sirte oil has resumed gas production from Hateiba and Assoumoud gas fields according to the chairman. In other news Libyan oil workers and officials said damage to ports and oil terminals is so severe and security so poor that the large-scale resumption of exports to Western markets could be delayed longer than some officials had predicted.

 

Geopolitical News:

·      Yemeni president Ali Abdullah Saleh returned to Yemen his morning after spending three months in Saudi Arabia recovering from an assassination attempt in June.

 

Commodity

WTI Nymex

OTC Spot Gold

Level

78.43

1696.13

Change (NYSEARCA:USD)

-2.08

-44.00

 

LOOKING AHEAD

 

Economic Releases

 

CDT

BST

 

DATA

EXP

PREV

0800

1400

BE

Business Confidence Level SA M/M (Sep)

-9.0

-7.8

0930

1530

US

ECRI Weekly Index W/W (Sep 23)

 

122.4

0930

1530

US

ECRI Weekly Annualised Y/Y (Sep 23)

 

-7.1%

1200

1800

US

Baker Hughes Rig Count W/W (Sep 23)

 

1985

 

Speakers

0700

1300

EU

ECB’s Weidmann

0700

1300

GE

Finance Minister Schaeuble

0730

1330

GE

Chancellor Merkel

0845

1445

FR

French Finance Minister Baroin

0900

1500

WLD

Annual Meeting of The World Bank Group and IMF

0915

1515

US

President Obama in Washington

0930

1530

EU

ECB’s Trichet at Bretton Woods Committee’s International Council in Washington

1100

1700

GE

Chancellor Merkel

1300

1900

CA

BoC Governor Carney

1300

1900

US

Fed’s Dudley (Voting Member)

1300

1900

US

Fed’s Williams (Non-Voting Member)

1415

2015

WLD

OECD’s Secretary General Gurria

1530

2130

EU

ECB’s Trichet Speaking in Washington

 

Auction

1000

1600

US

Fed’s Outright Treasury Coup. Purch. Nov’21 – Aug’41 (USD 0.50-1.25bln)

 

Earnings

US

National Semiconductor

 

**Note: UST October options expiry

             Long Gilt October options expiry

             Japanese Market Holiday

 

Prices taken at 1250BST