• European stock market, economy and companies update (September 17, 2015)

    Notes/Observations
    - Japan Aug trade balance relatively in line; some concerns over the waning effect of Abeonmics and prompted a downward trimming in Q2 GDP estimates
    - FOMC rate decision; any potential hike could be accompanied by a dovish statement to dampen the impact
    - SNB keeps its policy steady (as expected) noting that CHF currency rate remained high and overvalued after slight depreciation
    - ECB bulletin sees risks to growth and inflation forecasts; reiterates it has the will to act further
    - Copper prices spiked up about 1% after an 8.3 earthquake reported offshore Chile


    SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
    Equities
    Indices [Stoxx50 +0.2%, FTSE -0.2% at 6,117, DAX +0.2% at 10,247, CAC-40 +0.1% at 4,652, IBEX-35 +0.5% at 10,028, FTSE MIB unch at 22,056, SMI -0.1% at 8,862, S&P 500 Futures -0.2% at 1,983]

    - Market Focal Points/Key Themes: European stocks slipped ahead of Fed rate announcement; Swiss stocks largely flat afer SNB keeps rates unchanged; emerging markets supported ahead of Fed; Altice confirms acquisition of Cablevision in the US as expected; Teliasonera decided to exist Eurasia markets and focus on core operations; Antirust regulator voiced concerns over Shell's planned acquisition of BG Group

    Sectors:
    - Consumer discretionary [Merlin Entertainment MERL.UK -0.3% (challenging outlook)]
    - Industrials [Kier Group KIE.UK -3.8% (results), Rotork ROR.UK -16.1% (cuts guidance)]
    - Telecom [Altice ATC.NL +0.1% (acquisition), Teliasonera TLSN.SE +3.5% (strategic update)]

    Speakers
    - SNB statement reiterated that CHF currency rate remained high and overvalued after slight depreciation; to remain active in FX markets if necessary and saw CHF weakening over time. The strong Franc posed "challenging situation" for many companies. DP growth to gradually pick up in H2
    - ECB Economic Bulletin stated that it was premature' to assess impact of current events on inflation and reiterated that willing to act further if necessary as QE flexible
    - EU's Moscovici stated that France public finances trajectory was credible. He also reiterated that Greece debt haircut was not an option on the table
    - Sweden Central Bank (Riksbank) Floden stated that it needed to keep Repo Rate very, very low for next year
    - Greece banking sector might have to increase H2 bad loan provisions by 6.0B
    - ECB trimmed its ceiling of its emergency funding (ELA) to Greek banks to 88.9B (prior was 89.1B) - Greece Central Bank
    - Russia Finance Ministry said to be considering raising the pension age
    - Kuwait Oil Planner Al-Attar: Govt seeking to increase oil production capacity; to begin offshore oil exploration in two years. To add 700K bpd from offshore. Kuwait to raise production capacity to 3.5M bpd by end-2015- and targets 4M bpd by 2020
    - UAE Central Bank reiterated its firm commitment to USD peg; no need to discontinue

    Currencies
    - USD majors were range relatively bound ahead of FOMC rate decision. The overall consensus still sees December as the most likely meeting for rate lift-off. Dealers noting that any USD setback resulting from FOMC decision would provide a buying opportunity (no specific levels provided)
    - The CHF was a touch firmer after SNB kept its policy steady and provided no hints of cutting rates further into negative territory at this time
    - The JPY currency was a touch weaker after Japanese trade data had some concerns over the export sector which missed expectations and the reading was 1.2 of month ago level (3.1% v 4.3%e). Some concerns over the waning effect of Abeonmics and prompted a downward trimming in Q2 GDP estimates

    Fixed Income:
    - Bund futures trade at 153.86 up 10 ticks as the market makes back ground after its decline in anticipation of tonight's FED decision. Support moves to 153.51 region yesterdays low followed 153. A move below would target strong support at 152.76 the September low. A break would see an extension to potentially 152.36 followed by 151.84. To the upside a break of the highs would put pressure on 153.93 with 154.22 looking to cap the move. A move above would target 154.54.
    Today we see a raft of supply out of Europe with Spain selling 4.81B in 3y, 5y, 10y SPGB the equivalent of 19K Bund futures. France sold 7.99B in its 3 and 5 year OATs the equivalent of 23K Bund futures. Later France will also be tapping its 9Y OATi, as well as the 15y and 25Y OATei for 1.0-1.5B combined the equivalent of 9K Bund futures.
    - UK Gilt futures trades 117.26 down 5 ticks, after broadly inline Retail Sales data out of the UK. Analysts look for continued downside to target 117.07 the 38.2% retracement level, with a move below here seeing 116.65 the 3 week low. To the upside a break of today's high at 117.55 for continued strength back to initial resistance at 117.66, followed by 117.89. 118.14 would be needed to reassert the uptrend.
    - Thursday's liquidity report showed Wednesday's excess liquidity fell to 494.3B a fall of 11B from 505.3B prior. This was primarily due to AFs and MonPol portfolios rising to negative 80.6B. AFs are negative when the MonPol portfolios exceeds the liquidity absorbing effect of AFs. Use of the marginal lending facility rose to 72M from 435M.

    Political/In the Papers:
    - (GR) Latest poll from Kapa Research shows support for Syriza Party at 29.0% and New Democracy at 28.4%
    - (GR) Latest poll from Prorata finds that Syriza has a lead over the Conservative New Democracy party with a 28%-24% margin
    - (CN) China FX regulator SAFE: No basis for reports of large-scale capital outflows

    Looking Ahead
    All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
    - 05:30 (IE) Ireland Debt Agency (NTMA) to sell 3-month Bills
    - 05:50 (FR) France Debt Agency (AFT) to sell combined 1.-1.5B in I/L 2025, 2030 and 2040 Oats (Oatei)
    - 06:00 (RO) Romania to sell Bills
    - 06:00 (CZ) Czech Republic to sell Bills
    - 06:00 (PT) Portugal Aug PPI M/M: No est v -0.4% prior; Y/Y: No est v -2.5% prior
    - 06:00 (IL) Israel Q2 Preliminary GDP Y/Y: 0.5%e v 0.3% advance
    - 06:00 (IL) Israel Q2 Current Account Balance: No est v $2.9B prior
    - 07:00 (BR) Brazil Sept IGP-M Inflation (2nd Preview): 0.7%e v 0.2% prior
    - 08:00 (PL) Poland Central Bank (NBP) Sept Minutes
    - 08:00 (RU) Russia Gold and Forex Reserve w/e Sept 11th: No est v $365.3B prior
    - 08:00 (PL) Poland Aug Sold Industrial Output M/M: -6.1%e v -1.3% prior; Y/Y: 6.3%e v 3.8% prior; Construction Output Y/Y: 3.5%e v -0.1% prior
    - 08:00 (PL) Poland Aug PPI M/M: -0.3%e v -0.4% prior; Y/Y: -2.3%e v -1.7% prior
    - 08:00 (PL) Poland Aug Retail Sales M/M: -1.0%e v 2.1% prior; Y/Y: 1.5%e v 1.2% prior; Real Retail Sales Y/Y: 3.5%e v 3.5% prior
    - 08:15 (US) Baltic Dry Bulk Index
    - 08:30 (US) Aug Housing Starts: 1.160Me v 1.206M prior; Building Permits: 1.159Me v 1.130M prior (revised from 1.119M prior)
    - 08:30 (US) Initial Jobless Claims: 275Ke v 275K prior; Continuing Claims: 2.26Me v 2.260M prior
    - 08:30 (US) Q2 Current Account Balance: -$111.5Be v -$113.3B prior
    - 08:30 (US) Weekly USDA Net Export Sales
    - 09:00 (RU) Russia Aug Real Retail Sales M/M: 3.0%e v 3.3% prior; Y/Y: -8.9%e v -9.2% prior
    - 09:00 (RU) Russia Aug Unemployment Rate: 5.3%e v 5.3% prior
    - 09:00 (RU) Russia Aug Real Wages Y/Y: -9.0%e v -9.2% prior; Real Disposable Income: -5.0%e v -2.0%e
    - 09:00 (RU) Russia Aug Investment in Productive Capacity Y/Y: -9.1%e v -8.5% prior
    - 10:00 (US) Sept Philadelphia Fed Business Outlook: 6.0e v 8.3 prior
    - 10:00 (DE) German Chancellor Merkel in Berlin
    - 10:30 (EU) EU's Malmstroem in Brussels
    - 10:30 (US) Weekly EIA Natural Gas Inventories
    - 11:00 (US) Treasury to announce size in upcoming 2-year, 5-year, 7-year notes
    - 11:00 (BR) Brazil to sell Fixed Rate 2021 and 2025 Bonds
    - 11:00 (BR) Brazil to sell 2016, 2017 and 2019 Bills
    - 13:00 (FR) France President Hollande with Italy PM Renzi
    - 13:00 (US) Treasury to sell 10-Year TIPS
    - 14:00 (US) Fed's summary of economic projections
    - 14:00 (IT) Italy Fin Min Podoan in Rome
    - 14:00 (US) FOMC Interest Rate Decision:
    - 14:30 (US) Fed Chair Yellen post rate decision press conference
    - 17:00 (KR) South Korea Aug PPI Y/Y: No est v -4.0% prior
    - 19:30 (AU) RBA Gov Stevens before Parliament Committee
    - 19:50 (JP) BOJ Minutes for Aug. 6-7 Meeting
    - 21:30 (CN) China Aug Property Prices
    - 23:30 (HK) Hong Kong to sell 1-month Bills


    Economic data
    - (ID) Indonesia Central Bank (BI) left its Reference Rate unchanged at 7.50% (as expected)
    - (CH) SNB left its Sight Deposit Interest Rate unchanged at -0.75% (as expected) and maintain 3-Month Libor Target between -1.25 and -0.25%
    - (NL) Netherlands Aug Unemployment Rate: 6.8% v 6.8% prior
    - (UK) Aug Retail Sales Ex Auto Fuel M/M: 0.1% v 0.1%e; Y/Y: 3.5% v 3.8%e
    - (UK) Aug Retail Sales (including Auto Fuel) M/M: 0.2% v 0.2%e; Y/Y: 3.7% v 3.8%e
    - (HK) Hong Kong Aug Unemployment Rate: 3.3% v 3.3%e
    - (GR) Greece Q2 Unemployment Rate: 24.6% v 25.3%e

    Fixed Income Issuance:
    - (ES) Spain Debt Agency (Tesoro) sold total 4.813B vs. 4.0-5.0B indicated range in 2018, 2020 and 2025 bonds
    - Sold 1.835B in 0.25% 2018 bono, Avg yield: 0.402% v 0.342% prior, bid to cover: 1.9x v 4.93x prior, Max Yield: 0.412% v 0.348% prior
    - Sold 1.415B in 1.15% July 2020 bono, Avg yield 1.020% v 1.050% prior, bid to cover 2.38x v 2.24x prior, Max Yield: 1.028% v 1.070% prior
    - Sold 1.563B in 2.15% Oct 2025 bono; Avg Yield: 2.145% v 2.128% prior; Bid-to-cover: 2.49x v 1.75x prior; Maximum Yield: 2.156% v 2.146%
    - (FR) France Debt Agency (AFT) sold total 7.994B vs. 7.0-8.0B indicated range in 2018 and 2020 Oats
    - Sold 3.916B in 0.0% Feb 2018 Oat; Avg Yield: -0.09% v -0.08% prior; Bid-to-cover: 1.92x v 1.71x prior
    - Sold 4.078B in new 0.25% Nov 2020 Oat; Avg Yield: 0.31% v 0.28% prior; Bid-to-cover: 1.94x v 1.54x prior

    Contributed by Trade The News
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