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Friday, March 29, 2024

Daily US Opening News And Market Re-Cap: June 16

Courtesy of Tyler Durden

From Ran Squawk:

  • Risk-aversion remains the dominant theme, with particular emphasis on Greece
  • According to Eurozone and banking sources, Germany is pushing to delay the second rescue package for Greece until September, which was later reiterated by a German government source
  • IMF’s Zhu said the IMF is very concerned by Greece, and the situation has changed dramatically in the last 24 hours. However, EU’s Rehn said he is confident that Greece will get the next tranche in July, and will be able to avoid a default
  • There are growing signs of diminishing confidence in the Greek PM Papandreou, as the number of deputies resigning from the ruling party grows. The PM is chairing a meeting of lawmakers at 1630 local time today
  • A sharp decline in retail sales data from the UK weighed on GBP/USD
  • The IEA raised its 2011 oil demand forecast, which provided support to WTI crude futures

Market Re-Cap
 
Greek debt concerns continued to dominate the market sentiment, with latest comments from IMF’s Zhu that the situation in Greece has changed dramatically in the last 24 hours promoted further risk-aversion. Allied to this, comments from Eurozone and banking sources that Germany is pushing to delay the second rescue package for Greece further dented risk-appetite. There are growing signs of diminishing confidence in the Greek PM Papandreou, as the number of deputies resigning from the ruling party grows. As a consequence, European equities traded in negative territory during the session, which supported Bunds, and Eurozone peripheral 10-year government bond yield spreads widened across the board. In the forex market, the USD-Index remained in positive territory, which in turn weighed on EUR/USD and GBP/USD. GBP/USD came under further pressure following an unexpected decline in retail sales figures from the UK, which led the pair tumble around 60 pips after the release.
 
Moving forward, developments in Greece remains the focus today, however markets also look ahead to key economic data from the US in the form of jobless claims, housing data, and Philadelphia Fed. In fixed income, 30-year TIPS refunding announcement, allied with another Fed’s Outright Treasury Coupon Purchase operation in the maturity range of Jun’15-Nov’16, with a purchase target of USD 4-5bln are also scheduled later in the session.
 
Asia Headlines:
 
Sentiment among Japanese manufacturers rose in June for the second straight month and is seen improving further in the coming quarter, underlining prospects for the economy’s recovery from the March 11 earthquake, according to The Monthly Reuters Tankan poll, which has a 95% correlation with the BoJ’s closely watched quarterly Tankan survey. (RTRS)
 
Elsewhere, an interest rate increase in China isn’t “far away” as not doing so would do more harm to the economy. Also, the yield on PBOC’s 3-month bills unexpectedly rose by around 8 BPS, suggesting to many market participants that another benchmark interest rate rise may be on the way. However Credit Suisse said China’s one-year lending rate may climb to 7.16% by year-end, versus its previous forecast of 7.66% in March. (Economic Information Daily/ RTRS/ Sources)
 
US Headlines
 
The number of US homes seized by banks fell in May as processing delays continued to hamper foreclosures, according to a survey by RealtyTrac. The survey showed that banks took over 66,879 homes last month, down 4% from April and a drop of 29% from a year earlier. (RTRS)
 
Also, Pimco’s Bill Gross said the Fed next week could signal that interest rates could be capped if warranted due to soft economic growth, adding that “QE3 is likely to take the form of extended period language or interest rate caps on 2-3 year Treasuries”. (RTRS)
 
EU and UK Headlines:
 
•    Eurozone CPI (May) M/M 0.0% vs. Exp. 0.0% (Prev. 0.6%)
•    Eurozone CPI (May) Y/Y 2.7% vs. Exp. 2.7% (Prev. 2.8%)
•    Eurozone Employment (Q1) Q/Q 0.0% vs. Prev. 0.1% Rev. to 0.2%
•    UK Retail Sales (May) M/M -1.4% vs. Exp. -0.6% (Prev. 1.1%)
•    UK Retail Sales (May) Y/Y 0.2% vs. Exp. 1.5% (Prev. 2.8%, Rev. to 2.4%) (RTRS)
•    Spanish bond auction for EUR 1.326bln, 4.30% 31-Oct-2019, bid/cover 2.13 vs. Prev. 2.12 (yield 5.352% vs. Prev. 3.887%)
•    Spanish bond auction for EUR 1.513bln, 5.90% 30-Jul-2026, bid/cover 2.57 (yield 6.027%) (RTRS)
 
Full report:

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