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DAILY US OPENING NEWS - 12/01/12

 ·      A successful Spanish bond auction came in at double the expected target and with a significant fall in yields, pushing European markets into positive territory across the board.

 

·      Following an unchanged Bank of England Base rate, market focus shifts onto the ECB rate decision later in the session.

 

·      RANsquawk European Morning Briefing Video:  http://www.youtube.com/watch?v=9wQBvnGilrI

 

 

Market Re-Cap

 

Markets are reacting well across the board following further buoying from a successful Spanish auction where the target was met twofold. The Spanish bond auction also witnessed a significant drop in yields, causing the Spanish-German bond yield spread to tighten by 18bps. Despite today’s disappointing UK and EU manufacturing data, both EURUSD and GBPUSD are trading higher.
Looking forward to the second half, rates will be announced from the ECB, who are holding a press conference following this.

 

 

US Headlines

 

PIMCO’s Gross boosted treasurys to 30% from 23% in November. (Sources)

 

2011 foreclosures drop 34% amid persistent delay, marking the lowest level of filings since 2007. (RealtyTrac)

 

 

Asian Headlines

 

A Chinese Government Economist has said CPI is likely to rebound in January, GDP growth to fall in the first half of 2012, big monetary policy loosening is unlikely and that the property market controls in place are unlikely to be relaxed. (Sources)

 

Chinese CPI Y/Y (Dec) 4.0% vs. Exp. 4.1% (Prev. 4.2%) - China’s inflation cooled to a 15-month low

Chinese PPI Y/Y (Dec) 1.7% vs. Exp 1.7% (Prev. 2.7%) - producer-price gains were the smallest in 2 years (RTRS)

 

 

EU and UK Headlines

 

A successful Spanish auction was held earlier in the session bringing in twice the expected target, resulting in a significant decrease in bond yields.

 

The EU and UK released disappointing manufacturing and industrial production figures today, however markets were more responsive to the Spanish auctions.

 

Eurozone Industrial Production SA M/M (Nov) -0.1% vs. Exp. -0.3% (Prev. -0.1%)

Eurozone Industrial Production WDA Y/Y (Nov) -0.3% vs. Exp. 0.2% (Prev. 1.3%)

Posting the first Y/Y fall since December 2009.

 

UK Industrial Production (Nov) M/M -0.6% vs. Exp. -0.1% (Prev. -0.7%, Rev. -1.0%)

UK Industrial Production (Nov) Y/Y -3.1% vs. Exp. -2.2% (Prev. -1.7%, Rev. -2.1%)

UK Manufacturing Production (Nov) M/M -0.2% vs. Exp. 0.0% (Prev. -0.7%, Rev. -0.9%)

UK Manufacturing Production (Nov) Y/Y -0.6% vs. Exp. -0.4% (Prev. 0.3%, Rev. 0.1%)

 

The Bank of England has held their key benchmark interest rate at 0.50% as expected.

 

UK hope of an export-led recovery is hit as the UK’s trade gap with the rest of the world hit GBP 8.6bln. (Independent)

 

UK Gas bills could drop by up to GBP 169 this year as Britain’s energy giants fight a fierce price war. (Express)

 
 

EQUITIES

 

European markets are performing strongly so far today following a significant fall in Spanish bond yields cutting the cost of borrowing and pushing equities upwards.

 

Tesco experienced a fall in share value following below expectations sales reports this morning, taking a toll on similar stocks such as J Sainsburys.

 

RBS sees 5500 total job losses from restructuring. (Sources)

 

FTSE index is underperforming at the midway point following downwards pressure from results published by Tesco and RBS.

 

Top performing sectors in BE500: Financials (3.19%), Basic Materials (2.13%), Industrials (1.33%)

Worst performing sectors in BE500: Consumer Services (-1.80%), Oil & Gas (-0.34%), Health Care (0.06%)

 

Index

DAX

CAC

FTSE

EUROSTOXX

SMI

Level

6251.51

3250.31

5696.67

2381.68

6055.27

Change (ticks)

99.17

45.48

25.85

42.17

47.23

 

**Note: For US equity news in detail, kindly refer to the RANsquawk Daily US Equity Opening News report.

 

FX

 

On the back of a successful Spanish bond auction earlier today, where the value of bonds sold doubled the target amount, EURUSD and GBPUSD are trading up halfway through the EU session.

Following a BoE announcement that it would hold rates at 0.50%, FX markets were wholly unaffected as Spanish bond auctions remain to be overriding market force.

 

Currency

EURUSD

GBPUSD

USDJPY

Level

1.2775

1.5367

76.86

Change (pips)

0.0068

0.0038

0.0100

 



COMMODITIES

 

Oil rose from the lowest settlement in almost two weeks on concern that a strike in Nigeria and the threat of sanctions against Iran’s nuclear program will curb crude supplies, as well as a weaker USD on the back of broad based risk appetite following Spanish auctions.

 

Oil & Gas News:

 

·   China 2012 natural gas output may rise 11%.

·   Nigerian Oil Union says it has withdrawn workers from oil fields.

 

 

Geopolitical News:

 

·   US Treasury Secretary Geithner’s efforts to tighten economic sanctions on Iran over its nuclear program won backing from Japan a day after China rejected limiting oil imports from the country.

·   Japanese Prime Minister Noda told US Treasury Secretary Geithner that he shared serious concerns about Iran’s nuclear capabilities.

·   A pledge by Japan’s Finance Minister that the country will reduce oil imports from Iran is one of the many options Japan is considering according to a top government spokesman.

·   An Indian oil ministry official denied that the government had asked refiners to reduce Iranian oil imports.

·   South Korea’s Prime Minister Kim Hwang-sik will visit Oman and the UAE from Friday for oil supply talks as Seoul plans for toughened US sanctions on Iran.

 

 

Corporate News:

 

·   Chevron warned that Q4 profit would be significantly below the previous quarter as lower margins and refinery input volumes along with a lack of asset sales hurt downstream results.

 

**Note: For commodities news in detail, kindly refer to the RANsquawk Daily Energy Commentary report.

 

Commodity

WTI Nymex

OTC Spot Gold

Level

102.25

1657.05

Change (NYSEARCA:USD)

1.38

15.08

 



LOOKING AHEAD

 

Economic Releases

 

CST

GMT

 

DATA

EXP

PREV

0645

1245

EC

ECB Rate Announcement M/M (Jan)

1.00%

1.00%

0730

1330

US

Advance Retail Sales M/M (Dec)

0.2%

0.2%

0730

1330

US

Retail Sales Less Autos M/M (Dec)

0.3%

0.2%

0730

1330

US

Retail Sales Ex Auto & Gas M/M (Dec)

0.3%

0.2%

0730

1330

US

Initial Jobless Claims W/W (Jan 7)

375K

372K

0730

1330

US

Continuing Claims W/W (Dec 31)

3590K

3595K

0730

1330

CA

New Housing Price Index M/M (Nov)

0.2%

0.2%

0730

1330

CA

New Housing Price Index Y/Y (Nov)

2.4%

2.5%

0900

1500

US

Business Inventories M/M (Nov)

0.4%

0.8%

0900

1500

US

Philadelphia Fed Business Outlook Survey: Revisions

 

 

0900

1500

UK

NIESR GDP Estimate Q/Q (Dec)

 

0.3%

0930

1530

US

EIA Natural Gas Storage Change W/W (Jan)

 

-76

1300

1900

US

Monthly Budget Statement M/M (Dec)

-79.0B

-137.3B

 

Speakers

0700

1300

IT

S&P’s Analysts Speak before Parliamentary Committee

0730

1330

EU

ECB Draghi’s Press Conference following the Rate Decision

0930

1530

EU

EU’s Van Rompuy, Almunia, Hedegaard & Oettinger

0930

1530

WLD

IMF Holds its Regular News Briefing

N/A

N/A

FR

French Foreign Minister Juppe travels to Japan, Myanmar

 

Auctions

1000

1600

UK

BoE Confirms Details of Following Week’s APF Operations

1000

1600

US

10-year TIPS Refunding Announcement

1000

1600

US

Fed’s Outright Trea. Coup. Sales Oct’12-Apr’13 (USD 8-8.75bln)

1200

1800

US

USD 13bln 30-year Bond Auction

 

 

 


Prices taken at 1226GMT