06.01.2012 13:17 Friday ***Economic Data***- (EU) ECB: €1.9B borrowed in overnight loan facility vs. €4.8B prior; €455.3B parked in deposit facility (record high) vs. €443.7B prior
- (UK) Dec Halifax House Prices M/M: -0.9% v -0.9% prior; Y/Y: -1.3% v -1.0% prior
- (CZ) Czech Nov Industrial Output Y/Y: 5.4% v 0.5%e; Construction Output Y/Y: -2.3% v -8.0% prior
- (CZ) Czech Nov Trade Balance (CZK): 18.4B v 18.0Be
- (DK) Denmark Nov Unemployment Rate: 4.2% v 4.3%e; Gross Unemployment Rate: 6.2% v 6.3%e
- (HU) Hungary Nov Preliminary Industrial Production M/M: +4.2% v -0.9% prior; Y/Y: 3.5% v 1.5%e
- (HU) Hungary Nov Producer Prices M/M: 2.5% v 1.9% prior; Y/Y: 8.0% v 7.1%e
- (CH) Swiss Dec Foreign Currency Reserves (CHF): 254.2B v 231.6 prior
- (PH) Philippines Dec Foreign Reserves: $75.1B v $76.4B prior
- (CH) Swiss Dec CPI M/M: -0.2% v -0.1%e; Y/Y: -0.7% v -0.6%e
- (CH) Swiss Dec CPI EU Harmonized M/M: +0.3 v -0.4% prior; Y/Y: -0.4% v -0.8% prior
- (UK) Dec New Car Registrations Y/Y: -3.7% v -4.2% prior
- (CZ) Czech Dec International Reserves: $39.9B v $41.3B prior
- (IC) Iceland Dec Preliminary Trade Balance (ISK): 14.5B v 7.9B prior
- (NO) Norway Nov Industrial Production M/M: +1.2 v -1.8% prior; Y/Y: -1.2% v -5.7% prior
- (NO) Norway Nov Manufacturing Production M/M: +0.2 v-0.1%e; Y/Y: 0.4%t v 0.7% prior
- (NO) Norway Nov Retail Sales Volume M/M: 0.1% v 0.3%e; Y/Y: 0.9% v 1.2% prior
- (EU) Euro Zone Dec Business Climate Indicator: -0.31 v -0.48e; Consumer Confidence: -21.1 v -21.2e; Economic Confidence: 93,3 v 93.3e; Industrial Confidence: -7.1 v -7.5e; Services Confidence: -2.1 v -2.1e
- (EU) Euro Zone Nov Retail Sales M/M: -0.8% v -0.4%e; Y/Y: -2.5% v -0.9%e
- (EU) Euro Zone Nov Unemployment Rate: 10.3 % v 10.3%e
- (PO) Portugal Dec Consumer Confidence: -56.8 v -56.0 prior; Economic Climate Indicator: -4.4 v -3.9 prior
- (BE) Belgium Nov Unemployment Rate: 7.2% v 7.3% prior
Fixed Income:
- (IN) India sold total INR140B vs. INR140B indicated in 2018, 2021 and 2032 bonds
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
-France President Sarkozy to meet Italian PM Monti later today amid EU Talks
- ECB's Knot: Euro might collapse if Greece pushed out
- US Non-farm payroll data might present more good news for US but can it dispel concerns over Europe
- Iran said to be preparing for new round of naval exercise
Equities:
FTSE 100 +0.30% at 5641, DAX +0.50% at 6128, CAC-40 +0.80% at 3169, IBEX-35 +0.60% at 8383, FTSE MIB +0.40% at 14,821, SMI flat at 6028
- European shares traded higher despite ongoing concerns over the crisis and rampant rumors over a French sovereign downgrade. Euro cross was hit by debt woes but bourses were resilient ahead of US nonfarm payrolls report which is expected to rise by 150K. Investors are optimistic that the world number one economy is showing signs of strengthening, especially after a strong fourth quarter. Banks shares were higher during the session.
Speakers:
- ECB's Noyer commented that the recent French bond sale was a very good sign and that sovereign bond sales across Europe were going well since the ECB introduced the long-term liquidity operation. He noted that the ECB could massively refinance banks without risks and no doubt of France's capacity to repay its debt obligation. He did not agree that France had effectively lost its AAA sovereign status. The Euro was a strong currency and would continue to exist but the recent decline in Euro was supportive of exports.
- IMF chief Lagarde reiterated the view that 2012 would be challenging and that its global economic forecast was likely to be revised lower (Currently at 4.0%). She noted that the IMF was keen on having all the necessary tools to combat the current crisis and was ready to help all members and not just Europe. Lastly she noted that 2012 would not be the end of the Euro
- Hungary PM Orban commented that the govt and central bank to cooperate in the future and hold daily consultations between them and added that central bank independence was a 'starting point'. The PM reiterated that the Govt would do everything to reach an agreement with IMF and saw a good chance for swift discussions with IMF. Hungary seeks to clarify row with EU Commission on central bank law (Comments after a Hungarian cabinet meeting involving Hungary PM, Central Bank Gov, Econ Min and IMF negotiator Fellegi)
- Greece's second bailout might have to exceed the original expected €130B according sources in "euro-zone circles". According to the article, the exact amount of aid needed by Greece depended on the ongoing private sector involvement (PSI) talks.
- Portugal PM reiterated the view that country woldl achieve 2012 bailout target of 3.0%; to create the conditions necessary for economic growth
- Switzerland's Social Democrats party seek the SNB to raise the EUR/CHF floor from the current 1.20 level
- Czech Central Bank Gov Singer commented that there was no reason to lose confidence in CZK currency
- Hungary Govt official Giro-Szasz stated that the Govt rejected press speculation that it planned to seize bank deposits and added that it would guarantee bank deposits
- Turkey Central Bank Gov Basci commented that the Lira currency would gain and the central bank would support such a move. He noted that the corridor was useful tool for TRY currency management. The recently announced new USD sales were an offensive tool to manage TRY currency and allowed Lira to compete with USD and added that the TRY currency overvalued might become a problem in 2012. The central bank acted strongly to quell lira currency speculation. Interest rates would normalize again once current tightening phase is completed. Turkey's current account was driven by credit growth and not caused by the exchange rate
- India Fin Min Mukherjee reiterated the view that FY12 fiscal deficit might be slightly more than the 4.6% target of GDP
- Japan Finance Ministry Official stated that it purchased €300M of the 3-year EFSF bond issuance held on Jan 5th (equal to approx 10% of the issuance)
- EU govt discussing grace period of up to one year on prospective Iranian oil ban
Currencies:
- The FX market consolidated its recent moves during the session but the greenback saw some late Asian firmness on rumors that North Korean suffered a nuclear incident at one of its facilities (South Korean, Japanese official both downplayed the chatter). The EUR/USD hovered around the 1.28 handle throughout the session. The ECB was again rumored to be again buying peripheral bonds via its SMP program with Italian and Spanish debt mentioned.
- The HUF currency rebounded off its record lows of 325.00 against the Euro as PM Orban spoke to calm investors concerns over the country's financing amid the ratification of the central bank law. The PM pledged to cooperate with the central bank in the future and sought to have swift discussions with the IMF on a precautionary credit line. The EUR/HUF was at 317 as the NY morning approached
Political/ In the Papers:
- The FT Deutschland reported Greece's second bailout might have to exceed the original expectation of €130 billion. According to sources cited in 'euro-zone circles', the exact amount of aid needed by Greece depends on the ongoing private sector involvement or PSI discussion. Note on January 2nd, it was reported that Germany might seek to have Greece's private creditors take larger write downs on their Greek debt holdings. There has also been speculation that Greece could require additional austerity measures.
- So far in 2012, banks have issued at least €10 billion in unsecured senior bonds per FT report. The banks which have issued unsecured debt include Rabobank, Nordea and ABN Amro. In 2011, European banks were having difficulty selling unsecured debt and thus increased their reliance on secured debt and covered bond sales
- Certain hedge funds, believed to be based in the UK, have found ways to circumvent Italy's ban on the short selling of financial stocks. It is suggested that these hedge funds could be helping drive down the stock prices of Italian banks. The story comes as Unicredit has declined more than 30% over the past two trading sessions.
- Following Spain's cabinet meeting yesterday to discuss further austerity, the Spanish region of Catalonia rejected the government imposed budget controls, and accused Madrid of taking over authority of the of the 17 autonomous regions. The Catalan Fin Min Andreu Mas-Colell said that they would consider, as a red line, anything looking like previous line-by-line approval of our budget proposals.
- The Monster Employment Index Europe demonstrates a y/y growth of 11% in December, the slowest rate of growth seen in the Index since mid- 2010. Germany continued to report the strongest growth trend of 32%, followed by 6% growth in UK and 4% in Sweden. Belgium, France, Italy and Netherlands weigh down the Index with negative annual growth.
- In response to US pressure, both Japan and Korea are looking for new crude oil suppliers to lower dependence on Iran. Japan's largest refinery JX Nippon Oil & Energy said it was in discussions with Saudi Arabia and other countries for alternative supplies. In addition South Korea said it would lower imports of Iran crude oil. South Korea's main purchasers of crude, SK Group and Hyundai Oilbank, reported that no instructions were received to switch Iranian supply lines but would do so if ordered by the government.
***Looking Ahead***
- (MX) Mexico Dec Consumer Confidence: 91.7e v 89.5 prior
- (EU) EFSF chief Regling
- 6:00 (PO) Portugal Nov Industrial Sales M/M: No est v -2.5% prior; Y/Y: No est v 2.5% prior
- 6:00 (BR) Brazil Dec IBGE Inflation IPCA M/M: 0.5%e v 0.5% prior; Y/Y: 6.5%e v 6.6% prior
- 6:00 (CL) Chile Dec CPI M/M: 0.1%e v 0.3% prior; Y/Y: 3.9%e v 3.9% prior; CPI Ex Perishables & Fuel M/M: 0.1%e v 0.2% prior
- 6:00 (DE) Germany Nov Factory Orders M/M: -1.6%e v +5.2% prior; Y/Y: -1.3%e v +5.4% prior
- 7:00 (CA) Canada Dec Net Change in Employment: +20.0Ke v -18.6K prior; Unemployment Rate: 7.4%e v 7.4% prior
- 8:30 (US) Dec Change in Nonfarm Payrolls: 150Ke v 120K prior; Change in Private Payrolls: 175Ke v 140K prior; Change in Manufacturing Payrolls: +5Ke v +2K prior
- 8:30 (US) Dec Unemployment Rate: 8.7%e v 8.6% prior; Underemployment Rate: No est v 15.6% prior
- 8:30 (US) Nov Avg Hourly Earning M/M: +0.2%e v -0.1% prior; Avg Weekly Hours: 34.3e v 34.3 prior
- 9:00 (US) Fed's Dudley
- 9:45 (IT) Italy PM Monti
- 10:00 (EU) ECB member Costa
- 10:20 (US) Fed's Rosengren speaks on economy in Connecticut (non-voter)
- 11:00 - (FR) Italy PM Monti meets French President Sarkozy
- 11:00 (EU) ECB Orphanides
- 12:40 (US) Fed's Duke
- 13:00 (US) Fed's Raskin
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