• European stock market, economy and companies update (September 21, 2015)

    Notes/Observations
    - Greece elections: Syriza Party returns to power in snap election by comfortable margin (performing better than prior polls); to again form ruling coalition with Independent Greek Party
    - ECB's alarm clocks on inflation getting notice; dealers note face headwinds and no tailwinds when trying to revive inflation expectations


    SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
    Equities
    Indices [Stoxx50 +0.5%, FTSE +0.6% at 6,141, DAX -0.6% at 9,856, CAC-40 +0.9% at 4,575, IBEX-35 +0.7% at 9,912, FTSE MIB +0.6% at 21,637, SMI +0.8% at 8,810, S&P 500 Futures +0.2% at 1,954]

    - Market Focal Points/Key Themes: European stocks open mixed; markets waiting for commentary from ECB members this week, as last week's Fed interest rate hold is understood to put more pressure on ECB to increase asset purchases; Greek stocks slip after Syriza secures majority in election; Zurich Re puts an end to discussions to buy RSA; Deutsche Wohnen in discussions to merge with Leg Immobilien; Volkswagen shares opened down after said was halting certain diesel car sales in the US following EPA investigation; oil prices moved higher supporting energy stocks

    Sectors:
    - Consumer discretionary [Tom Tailor TTI.DE -19.4% (profit warning), Deutsche Wohnen DWN.DE -6.6% (offer), Leg Immobilien LEG.DE +3.8% (receives offer)]
    - Energy [RWE RWE.DE +0.8% (potential investment)]
    - Financials [Royal & Sun Alliance RSA.UK -20% (takeover bid canceled), Zurich Insurance ZURN.CH -1.6% (Q3 outlook, cancels bid for RSA)]
    - Healthcare [Shire SHP.UK +3.5% (EU medication approval)]
    - Industrials [Volkswagen VOW3.DE -17.9% (US investigation), Elringklinger ZIL2.DE -17.8% (profit warning)]
    - Telecom [Inmarsat ISAT.UK +1.9% (airline deal)]

    Speakers
    - ECB's Linde (Spain): Monetary policy was working well and saw no implications from Fed delay
    - (EU) Euro Working Group (EWG) chief Wieser: Strong implementation of Greece bailout program was expected and reiterated that 1st bailout review to begin in Oct
    - Syriza Party chief Tsipras to be sworn in as PM at 14:00 ET (18:00 GMT) with new Greek govt to be presented on Tuesday, Sept 22nd
    - China PBoC and UK BOE extend swap line for CNY and GBP currencies
    - Taiwan Central Bank: Monetary policy alone cannot achieve balanced growth
    - Malaysia Central Bank Gov Zeti expressed confidence that FX reserves would be rebuilt

    Currencies
    - FX markets were little changed in quiet trading.
    - The EUR/USD was holding above the 1.13 level after testing 1.1450 last Friday. Late Friday saw the Euro weighed down by several ECB member comments that stressed it would not hesitate to act if inflation outlook was at risk. Analyst noted that continued dovish ECB speak could take EURUSD back into the 1.11 handle. Goldman Sachs analyst saw ECB extending QE program beyond Sept 2016 and that could push EUR lower by up to 10 cents
    - The USD/JPY was little changed just above the 120 handle as Tokyo was closed for a public holiday

    Fixed Income:
    - Bund futures trade at 155.04, down 6 ticks as markets stabilize after the sharp rally on Friday. A break of today's low will target 154.66, with analysts seeing a break to target 154.26, followed by 153.74. A break would see an extension to potentially 152.36 followed by 151.84. To the upside a break of resistance at 155.34 would see 155.51 initially followed by 156.01 next. Continuation would see 156.49 then 156.83.
    - UK Gilt futures trades 118.10, down 19 ticks, in unison with the general consolidation occurring this morning. Analysts look for downside retracement to target 117.59, with 117.15 filling the gap. To the upside a break of today's high at 118.32 looks for continued strength to September highs at 118.63, followed by 119.35 contract highs the eventual target.
    - Monday's liquidity report showed Friday's excess liquidity rose to 495.5B, an increase of 0.5B from 495B prior. This was primarily due to AFs and MonPol portfolios falling to negative 81.4B. AFs are negative when the MonPol portfolios exceeds the liquidity absorbing effect of AFs. Use of the marginal lending facility rose to 63M from 59M.
    - Corporate Issuance saw relatively light week, but expectations for potentially heavy issuance this week with analysts calling for some $30B to come to market believing many deals last week were postponed till after the FED. On the high yield front, inflows continued for a second week, with $236M of inflows last week, and $186M the week before. The year however remains negative at $2.9B of outflows, this compares with $4.5B of outflows in the prior year at this time.

    Weekly Supply
    - EGB Supply is expected to amount to around 7.0B this week with the Netherlands planning to tap its 3y DSL on Tuesday for 2.5-3.5B. On Wednesday sees Germany selling 4.0B in its 2y Shatz auction, and on Friday sees Italy sell 1.0B in its 9y BTPei. Cashflow for the week is negative with no C&R to be repaid.
    - Gilt Supply: The DMO will tap a 53y Gilt for 4.0B this week
    The net cash flow for this week is positive at 0.46B with 0.23bn of coupons to be repaid as well as 4.23B in BoE buybacks.
    - US Supply: The US Treasury will sell a combined $103B in 2y, 5y and 7y notes this week.
    The net cash flow for this week is negative with no coupons nor redemption's to be repaid.

    Political/In the Papers:
    - S&P raised Portugal sovereign rating one notch to BB+; Outlook stable
    - Moodys cut France sovereign rating 1 notch to Aa2; outlook stable
    - Fitch affirmed Finland sovereign rating at AAA; outlook negative

    Looking Ahead
    All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
    - (PT) Portugal July Current Account Balance: No est v 0.2B prior
    - 05:30 (NL) Netherlands Debt Agency (DSTA) to sell 3-month and 6-month Bills
    - 06:00 (BE) Belgium Debt Agency cancels Bond auction
    - 06:00 (RO) Romania to sell 4.75% 2025 bond
    - 06:00 (IL) Israel July Manufacturing Production M/M: No est v 3.7% prior
    - 06:30 (EU) EU's Dombrovskis on Greece election
    - 06:45 (US) Daily Libor Fixing
    - 07:00 (US) Fed's Bullard (hawk, non-voter)
    - 07:30 (BR) Brazil Central Bank Weekly Economists Survey
    - 07:30 (BR) Brazil July Economic Activity Index (Monthly GDP) M/M: % v -0.3%e; Y/Y: % v -4.4%e
    - 08:00 (IN) India announces details of upcoming bond auction
    - 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming auctions
    - 08:15 (US) Baltic Dry Bulk Index
    - 08:30 (CA) Canada July Wholesale Trade Sales M/M: 0.8%e v 1.3% prior
    - 08:30 (CH) Swiss Govt question time in Parliament
    - 08:45 (EU) ECB's Coeure (France) in Rome
    - 08:50 (FR) France Debt Agency (AFT) to sell combined 5.8-7.0B in 3-month, 6-month and 12-month bills
    - 09:00 (BE) Belgium Sept Consumer Confidence Index: No est v -6 prior
    - 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
    - 09:45 (EU) ECB announces Covered-Bond Purchases
    - 09:45 (UK) BOE to buy 1.41B in 3-7year Gilts
    - 10:00 (US) Aug Existing Home Sales: 5.50Me v 5.59M prior
    - 11:30 (US) Treasuries to sell 3-Month and 6-Month Bills
    - 12:00 (AT) ECB's Nowotny on panel regarding Austrian banking sector
    - 12:30 (BE) ECB's Praet (Belgium) in Geneva
    - 13:00 (US) Fed's Lockhart (moderate, FOMC voter)in Atlanta
    - 14:00 (MX) Mexico Central Bank (Banxico) Interest Rate Decision: Expected to leave Overnight Rate unchanged at 3.00%
    - 14:30 (CA) Bank of Canada (BOC) Gov Poloz in Calgary
    - 16:00 (US) Weekly Crop Condition Report
    - 20:30 (TW) Taiwan Aug Unemployment Rate: No est v 3.7% prior
    - 23:00 (TH) Thailand Central Bank to sell combined THB60B in 3-month, 6-Month Bills
    - 23:30 (HK) Hong Kong to sell 3-month, 6-Month Bills


    Economic data
    - (DE) Germany Aug PPI (miss) M/M: -0.5% v -0.3%e; Y/Y: -1.7% v -1.6%e
    - (NL) Netherlands Aug House Price Index M/M: -0.1% v +0.9% prior; Y/Y: 2.5% v 2.7% prior
    - (ES) Spain July Trade Balance: -1.4B v -2.1B prior
    - (TR) Turkey Sept Consumer Confidence Index: 58.5 v 62.4 prior
    - (TW) Taiwan Aug Export Orders (miss) Y/Y: -8.3% v -4.8%e
    - (HK) Hong Kong Aug CPI Composite Y/Y: 2.4% v 2.4%e
    - (HK) Hong Kong Q2 Current Account Balance: +$1.5B v -$0.9B prior; Overall Balance of Payment (BoP): $76.7B v $36.3B prior

    Fixed Income Issuance:
    - None seen

    Contributed by Trade The News
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