• European stock market, economy and companies update (September 11, 2015)

    Notes/Observations
    - Peru Central Bank (BCRP) unexpectedly raised Reference Rate unchanged by 25bps to 3.25%
    - Bank of Korea (BoK) keeps 7-Day Repo Rate unchanged at 1.50% (as expected); statement pushes back expectations for more easing
    - Markets tring to enduri a sense of calm as increasingly convinced that the Fed rate hike won't begin next week


    SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
    Equities
    Indices [Stoxx50 -0.9%, FTSE -0.5% at 6,122, DAX -0.9% at 10,120, CAC-40 -0.8% at 4,559, IBEX-35 -1.0% at 9,756, FTSE MIB -0.7% at 21,742, SMI -0.5% at 8,731, S&P 500 Futures -0.4% at 1,930]


    - Market Focal Points/Key Themes: European and UK indices are trading lower in the morning session, with UK mining companies Glencore, AstraZeneca and Rio Tinto providing support in the FTSE100. Contrarily, Redhill trades down after announcing proposals to restructure balance sheet and provide growth funding, along with G4S despite opening higher but trading down on the morning session. In Europe, Gerry Weber trades lower in the Dax after missing forecasts, with Temenos trading up in the SMI index raising revenue forecast guidance.

    By Sector:
    - Consumer discretionary: [GWI1.DE -10.1% (Q3 2015 results), JDW.UK +0.97% (FY15 results), STHR.UK +6.21% (Q3 2015 results), GFS.UK -0.16% (Awarded security contracts)]
    - Materials: [GLEN.UK +1.84% (earlier in the week suspended dividends and plans to raise $2.5B in share sale, commodities prices retracing off support), AAL.UK +2.44% (reports of cutting dividend to help contain debt levels from lowering commodities prices, RIO.UK +2.52% (UBS raised to buy from neutral)]
    - Industrials: [RHL.UK -36.9% (Restructure balance sheet and provide additional growth funding)]
    - Technology: [TEMN.CH +12.2% (Rises FY15 guidance)]
    - Telecom: [TEL.NO -1.71% (Withdraws from merger agreement with TeliaSonera)]
    - Healthcare: [AZN.UK -0.09% (Acquires manufacturing facility from Amgen)]

    Speakers
    - ECB's Coeure (France): Growth and employment were prerequisites for price stability adding that current growth was not strong enough to create a sufficient number of jobs. Reiterated view that ECB to continue asset purchases for as long as necessary and saw 'room for maneuver' on Greece when trust was restored
    - ECB single resolution mechanism (SSM) said to be hiring 260 regulators
    - Indonesia Central Bank: Reiterates view that monetary policy retains a tight bias; won't change stance amid uncertainty
    - Asia-Pacific Economic Cooperation (APEC) Finance Ministers draft statement: To resist all forms of protectionism; refrain from competitive devaluations
    - China PBoC said to ask banks to strengthen supervision on Non-residential Accounts (NRA) and require FX purchases to be deposited in off-shore account
    - China PBoC to improve Reserve Ratio system; to examine new method to calculate RRR for bank (technical adjustment); effective Sept 15th. To use average over period to calculate reserve ratio; to give flexibility in liquidity management. Change would not basically affect market liquidity as it remained ample but could in certain situations
    - IEA Monthly Report raised its forecast for 2015 global oil demand growth by 110K bpd to 1.71M bpd. Global oil demand growth moderating to "still above" trend +1.36M bpd in 2016. Oil price collapse was tightening supply globally. Saudi-led OPEC strategy of defending "market share regardless of price" appears to be working, driving out costly, inefficient production
    - Goldman Sachs analyst cuts oil price forecasts for both 2015 and 2016 citing global surplus; potential to fall near $20/barrel. Oil market even more oversupplied than previously expected and this will persist into 2016

    Currencies
    - USD has had a softer tone over the past 24 hours as participants become increasingly convinced that the Fed rate hike won't begin next week. Emerging market currencies benefited from the change in perspective for now.
    - the EUR/USD was around the 1.13 area throughout the session with dealers suggesting more upside as short Euro positions establish last week after the ECB press conference are shaken out.
    - Minutes has NOT materially shifted market expectations on timing of BOE liftoff, with first 25bps rate rise still expected in 4Q 2016.
    - The USD/JPY pair moved off the inspired LDP Yamamoto move when he suggested that Oct 30th BOJ meeting good opportunity for more easing. Dealers debated the benefit form Japan increasing QQE
    - EUR/CHF cross moved back above the 1.10 level; highest since the 1.20 floor was abandoned by the SNB back on Jan 15th

    Fixed Income:
    - Bund futures trade at 154.82 up 9 ticks in quiet trade. Support remains at 154.47 with analysts still looking for 154.20 filling Fridays gap. A move below this would target 153.75. To the upside 155.26 would mark Fridays high with a break of this targeting 155.45 the 200MA, with 155.72 the next target. Today we saw Italy come to market selling 7.75B in its 3, 7 and 31y BTPs accounting for the equivalent of 42K Bund futures or 52K BTP futures.
    - UK Gilt futures trades 118.05 up 2 ticks, little changed after weaker construction out data out of the UK. Analysts look for 118.40 yesterdays high to break to see continued strength back to 118.63 followed 118.85 then 119.34. Support is seen around the lows at 117.84 with the next target 117.59 followed by 117.27.
    - Friday's liquidity report showed Thursday's excess liquidity rose to 512.3B a rise of 4.0B from 508.3B prior. AFs and MonPol portfolios rose to negative 98.4B. AFs are negative when the MonPol portfolios exceeds the liquidity absorbing effect of AFs. Use of the marginal lending facility fell to 21M from 204M.
    - Corporate Issuance saw another $12.5B come to market led by a $6B multi tranche offering from Biogen and a $2B issuance from Danaher. - denominated issuance also remains strong with Apple to sell 1.5-2.0B in a 2 tranche offering, and Shell issuing a 3.45B three part offering, bringing yesterday issuance north of 7B.
    This week has seen some $50B of US denominated issuance, handily surpassing analysts expectation of $25B worth of issuance.

    Political/In the Papers:
    - (GR) Greece Efsyn: Syriza Party lead widens to 5 points from prior 3.5. (Syriza 28.5%; New Democracy 23.5%; Golden Dawn 6.5% and Communist Party 4.5%)

    Looking Ahead
    All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
    - (EU) Euro Finance Ministers, Central Bankers (EcoFin) meet in Luxembourg
    - (ES) Spain region Catalan National Day
    - 05:30 (ZA) South Africa to sell I/L Bonds
    - 06:00 (MY) Malaysia Central Bank (BNM) Interest Rate Decision: Expected to leave Overnight Policy Rate at 3.25%
    - 06:00 (IS) Iceland to Sell Bills
    - 06:00 (UK) DMO to sell combined 5.0B in 1-month, 3-month and 6-month Bills (2.0B, 1.0B and 2.0B respectively)
    - 06:30 (RU) Russia Central Bank (CBR) Interest Rate Decision: Expected to leave 1-week Deposit Rate unchanged at 11.00%
    - 06:45 (US) Daily Libor Fixing
    - 07:30 (IN) India Weekly Forex Reserves
    - 07:30 (UK) BOE's Forbes
    - 07:45 (EU) ECB's supervisory board chief Nouy
    - 08:00 (IN) India July Industrial Production Y/Y: 3.6%e v 3.8% prior
    - 08:00 (ES) Spain Debt Agency (Tesoro) announces specific bonds in upcoming auction
    - 08:15 (US) Baltic Dry Bulk Index
    - 08:30 (US) Aug PPI Final Demand M/M: -0.1%e v +0.2% prior; Y/Y: -0.9%e v -0.8% prior
    - 08:30 (US) Aug PPI Ex Food and Energy M/M: 0.1%e v 0.3% prior; Y/Y: 0.7%e v 0.6% prior
    - 08:30 (US) Aug Ex Food, Energy, Trade M/M: 0.1%e v 0.2% prior; Y/Y: 0.7%e v 0.9% prior
    - 08:30 (US) Weekly USDA Net Export Sales
    - 09:00 (MX) Mexico July Industrial Production M/M: -0.1%e v +0.2% prior; Y/Y: 0.5%e v 1.4% prior; Manufacturing Production Y/Y: 2.5%e v 4.2% prior
    - 09:30 (EU) Informal EcoFin in Luxembourg
    - 10:00 (US) Sept Preliminary University of Michigan Confidence: 91.2e v 91.9 prior
    - 11:00 (EU) Potential EU sovereign ratings:
    - (GR) Greece Sovereign Debt to Be Rated by S&P
    - (IE) Ireland Sovereign Debt May Be Published by Moody's
    - (PL) Poland Sovereign Debt May Be Published by Moody's
    - 12:00 (DE) German Chancellor Merkel on digital economy
    - 12:00 (IS) Iceland Aug International Reserves (ISK): No est v 620B prior
    - 12:00 USDA World Agricultural Supply and Demand Estimates (WASDE) Crop Report
    - 13:00 (US) Weekly Baker Hughes Rig Count
    - 14:00 (US) Aug Monthly Budget Statement: -$77.5Be v -$ prior
    - 15:00 (AR) Argentina Aug National Urban CPI M/M: 1.1%e v 1.3% prior; Y/Y: 14.5%e v 14.8% prior
    - 15:00 (AR) Argentina Aug Wholesale Price Index M/M: No est v 1.4% prior; Y/Y: No est v 13.5% prior


    Economic data
    - (UK) Weekly John Lewis Partnership LFL sales w/e Sept 4th: +4.9% v -0.4% prior
    - (DE) Germany Aug Wholesale Prices M/M: -0.8% v +0.1% prior; Y/Y: -1.1% v -0.5% prior
    - (DE) Germany Aug Final CPI (in-line) M/M: 0.0% v 0.0%e; Y/Y: 0.2% v 0.2%e
    - (DE) Germany Aug Final CPI EU Harmonized M/M: 0.0% v 0.0%e; Y/Y: 0.1% v 0.1%e
    - (FR) France July Current Account Balance: -0.4B v +0.8B prior
    - (ES) Spain Aug Final CPI (in-line) M/M: -0.3% v -0.3%e; Y/Y: -0.4% v -0.4%e
    - (ES) Spain Aug Final CPI EU Harmonized M/M: -0.4% v -0.4%e; Y/Y: -0.5% v -0.5%e
    - (ES) Spain Aug CPI Core M/M: +0.1% v -1.0% prior; Y/Y: 0.7% v 0.8% prior
    - (EU) ECB 21.0M borrowed in overnight loan facility vs. 204.0M prior; 148.4B parked in deposit facility vs. 147.4B prior - Daily Eurosystem Liquidity Conditions
    - (SE) Sweden Aug Unemployment Rate (beat): 6.4% v 6.8%e; Unemployment Rate (Seasonally Adj: 7.0% v 7.4%e; Unemployment Rate Trend: 7.2% v 7.3% prior
    - (SE) Sweden Q2 Final GDP (beat) Q/Q: 1.1% v 1.0%e; Y/Y: 3.3% v 3.0%e
    - (SE) Sweden July Household Consumption M/M: -0.2% v +0.2%e; Y/Y: 2.9% v 2.4% prior
    - (NL) Netherlands July Trade Balance: 4.8B v 5.1 B prior
    - (IT) Italy July Industrial Production M/M: 1.1% v 0.8%e; Y/Y: 2.7% v 2.9% prior; Industrial Production WDA Y/Y: 2.7% v 0.9%e
    - (RU) Russia Narrow Money Supply w/e Sept 4th (RUB): 8.10T v 8.11T prior
    - (CN) Weekly Shanghai copper Inventories: 140.8K v 128.9K prior
    - (CN) China Aug New Yuan Loans (CNY): 809.6B v 850.8Be
    - (CN) China Aug Aggregate Financing (CNY): 1.080T v 1.000Te
    - (CN) China Aug M2 Money Supply Y/Y: 13.3% v 13.3%e; M1 Money Supply Y/Y: 9.3% v 6.8%e; M0 Money Supply Y/Y: % v 3.0%e
    - (UK) July Construction Output M/M: -1.0% v +0.5%e; Y/Y: -0.7% v +0.9%e
    - (UK) BoE/GfK Aug Inflation Next 12 Months: 2.0% v 2.2% prior
    - (IS) Iceland Q2 GDP Q/Q: +3.3% v -1.1% prior; Y/Y: 5.6% v 4.8% prior

    Fixed Income Issuance:
    - (IN) India sold total INR140B vs. INR140B indicated in 2023, 2025 2033 and 2045 bonds
    - (IT) Italy Debt Agency (Tesoro) sold total 7.75B vs. 6.0-7.75B indicated range in 2018, 2022 and 2046 BTP
    - Sold 2.25B vs. 1.75-2.25B indicated in 0.25% May 2018 BTP; Avg Yield: 0.24% v 0.48% prior; Bid-to-cover: 1.59x v 1.49x prior
    - Sold 4.0B vs. 3.25-4.0B indicated in new Sept 2022 BTP; Avg Yield: 1.37% v 1.60% prior; Bid-to-cover: 1.35x v 1.47x prior
    - Sold 1.50B vs. 1.0-1.5B indicated in 3.25% Sept 2046 BTP; Avg Yield: 2.96% v 3.24% prior; Bid-to-cover: 1.29x v 1.31x prior

    Contributed by Trade The News
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