EUROPE: There is a muted calendar Monday, with only second tier releases
expected in the US. However, there is plenty to focus on in Europe. Firstly,
markets will have to take on board the Italy downgrade by Fitch seen after the
markets closed Friday. Fitch lowered the peninsula's rating by one notch to
BBB+, citing political turmoil in the wake of February's inconclusive election.
The data calendar gets underway at 0700GMT, with the release of German fourth
quarter labour costs and the January trade balance numbers. At 0745GMT, French
January industrial output numbers will hit the screens. Industrial production is
seen down 0.2% on month and down 2.7% on year. At 0900GMT, European Central Bank
Vice President Vitor Constancio is set to give a keynote speech at a London
conference entitled "Financial Regulation: Towards a global regulatory
framework?" Further Italy data is expected at 1000GMT, when fourth quarter final
GDP data is expected. GDP is seen down 0.9% q/q and down 2.7% on year. At
1100GMT, the OECD January leading indicator numbers will cross the wires.
ITALY: Italian bond yield spreads are wider in the wake of Fitch decisiotn to
downgrade Italy's sovereign rating by 1 notch downgrade late Friday to 'BBB+'
from A- with a negative outlook. Fitch cited: 1. inconclusive results of the
Italian parliamentary elections on Feb 24/25, which make it unlikely that a
stable new government can be formed in the next few weeks. The increased
political uncertainty and non-conducive backdrop for further structural reform
measures constitute a further adverse shock to the real economy amidst the deep
recession. 2. Q4 2012 data confirms that the ongoing recession in Italy is one
of the deepest in Europe. Fitch expects a GDP contraction of 1.8% in 2013, due
largely to the carry-over from the 2.4% contraction in 2012. Thirdly, the gross
general government debt will peak in 2013 at close to 130% of GDP compared with
Fitch's estimate of 125% in mid-2012, even assuming an unchanged underlying
fiscal stance. Fourthly, a weak government could be slower and less able to
respond to domestic or external economic shocks. The move by Fitch takes it to
same level as S&P -- 3 notches above junk. Moody's is 1 notch below S&P & Fitch
at Baa2 (negative outlook).
UK:There is limited UK data expected, with just the release of the February BOE
Quoted Rates data due at 0930GMT.
Further UK data is expected at 1000GMT, when fourth quarter final GDP data is
expected. GDP is seen down 0.9% q/q and down 2.7% on year.
UK PRESS: Further unrest in government circles will be seen Monday, the Times
reports, when former Cabinet Minister Liam Fox, much feted by the Torry Party
right, will call for an end to the "ring-fence" that protects school, aid and
NHS budgets.
UK PRESS: The UK Parliamentary Treasury Select Committee has accused the
Chancellor of "going soft" on risky lending as he fails to initiate stronger
measures put forward by the banking commission, the Times reports.
UK PRESS: A survey for the Chartered Institute of Marketers sees marketing
professionals shows an uptick in confidence levels over the last survey in
October, the FT reports.
UK PRESS: Accountants Deloitte have warned the UK government that the country is
more susceptible to an oil shock, as storage facility and filling station
closures has cut effective storage capacity across the country by as much as 2
days supply, the Telegraph says
UK PRESS: UK LibDem leader and Deputy PM Nick Clegg has told PM David Cameron he
will not back a referendum on the UK's EU membership after a 2015 election, the
FT says.
UK PRESS: Headhunters Morgan McKinley say the number of new job vacancies in the
City of London rose 11% m/m in February, showing show increased appetite in
hiring in the sector. However, the group note the number is still 15% lower than
in Feb 2012.
US: There is only a very limited calendar. However, it is worth
noting that the clocks in the US were wound forward an hour over the weekend,
leaving only a four hour time difference with London for the next two weeks.
At 1330GMT, the MNI Capital Goods Index for the March 08 week are released,
followed at 1430GMT by the MNI Retail Trade Index for the March 9 week.
In between at 1400GMT, the US February Employment Trends Index numbers will
cross the wires.
ZMIANA CZASU W US O 1 GODZINĘ WCZEŚNIEJ PRZEZ 2 TYGODNIE WOBEC GMT
EURO-DOLLAR: Closed in NY Friday at $1.3005 after rate had been shoved down to
lows of $1.2955 on reaction to the strong NFP data, recovered. Rate recovered to
$1.3017 before drifting off again into the close. Rate consolidated Friday's
volatile reaction in Asia, early trade was contained within a range of
$1.2985/1.3005 before it dipped to $1.2980 ahead of the Tokyo open then edged
slightly higher on euro-yen demand to trade within $1.2995/1.3010 through the
Asian afternoon. Offers seen placed between $1.3020/30 with stops above, but if
triggered expected to meet stronger sell interest placed toward $1.3050. Demand
remains at $1.2985/80 with corporate demand interest noted at $1.2950 and at
$1.2930. Germany trade data due at 0700GMT followed by France IP at 0745GMT the
highlight data of the day with a fairly light calendar in the US. US retail
sales and CPI due this week (Wednesday/Friday respectively); Eurozone IP
Wednesday, employment Thursday and EZ CPI Friday. SNB and Norges bank rate
decisions due Thursday. For today expect some adjustments to be seen in the
crosses after Friday's mainly dollar driven moves.
EURO-DOLLAR: Rate extends recovery to $1.3025, but reported offers placed
between $1.3020/30 so far able to counter. Stops are reported in place on a
break of $1.3030, which if triggered to expose stronger sell interest placed
into $1.3050.
CABLE: Closed in NY Friday at $1.4925 after rate had been shoved to fresh 2013
lows of $1.4885 on reaction to the releae of strong NFP data. Rate had managed
to recover to $1.4959 before it drifted back into the close. Rate slowly
squeezed lower in Asia, touching a low of $1.4901, but demand placed into
$1.4900 managed to cushion and allow rate to lift back and settle between
$1.4915/30 through the mid part of the Asian day. Late demand into Europe has
extended this recovery to $1.4936 with rate holding firm at writing. Resistance
seen toward $1.4950, more at $1.4960/65, a break here to open a move back toward
$1.4980 ahead of $1.5000/10. Support remains at $1.4900 ahead of $1.4885/80 and
$1.4855/50. Euro-sterling had been driven to extended highs of stg0.8743 post
NFP release before dropping back to stg0.8676, closing Friday's session at
stg0.8710. Rate in Asia consolidated these volatile moves with trade contained
within a range of stg0.8697-0.8718. The cross trades in early Europe around
stg0.8713. A light data calendar for the UK Monday, interest this week seen
Tuesday with release of UK IP and NIESR's GDP forecast.
YEN: Dollar-yen saw extended highs of Y96.55 on its initial reaction to the
strong NFP release Friday but sank back to Y95.50 before lifting back above
Y96.00 into the close. Similar moves for euro-yen which had seen highs of
Y125.92, dropped to Y123.81 before closing the week at Y124.86. Yen continued to
trade with an underlying soft tone, aided in part by BOJ Governor nominee Kuroda
comments suggesting stronger efforts to get inflation to 2.0%. Dollar-yen dipped
under Y96.0 only to meet willing buyers which cushioned the move and allowed it
to edge up to Y96.26, but offers between Y96.20/30 restricted upside progress.
Traders report that institutional investors have scattered demand interest below
Y96.00, the interest said to be for UST purchase. Offers seen from around Y96.25
through to Y96.40 with talk of stops placed from Y96.45 and extending to Y96.65.
Early Tokyo demand for euro-yen edged this rate to an eventual high of Y125.18,
settling around Y125.00 into Europe. Cross offers seen into Y125.20, stronger
between Y125.40/50 and between Y125.90/00.
DOLLAR-YEN: One Asian trader reports buying a round of dollar-yen between
Y96.07/08 for a regional prop account. Says it was 'tough to cover'. Rate
currently trades around Y96.08.
JAPAN STOCKS CLOSE: Japan's benchmark stocks are higher Monday, hitting fresh
closing highs as the yen continues to fall. The Nikkei 225 was higher by 65.43
points, or 0.53%, at 12349.05. Into the close, the broader-based TOPIX was
higher by 18.53 points at 1039.03. Market breadth indicators saw 144 issue
higher, 69 lower and 12 unchanged. Preliminary volume stood at 2.941 bn shares.
OPTIONS: FX: Option expiries for today's 1000ET cut, (14:00 GMT)
* Euro-dollar; $1.2850, $1.2900, $1.3000(large), $1.3050, $1.3100, $1.3175
* Dollar-yen; Y94.80, Y95.50, Y95.80, Y96.00
* Euro-yen; Y124.70
* Cable; $1.5020
* Aussie; $1.0100, $1.0195, $1.0245, $1.0270
* Aussie-Kiwi; NZ$1.2400
EUROZONE T-BILL ISSUANCE: Eurozone Sovereign T-bill issuance for this week are
planned from Germany, France, Spain, Italy and Belgium. Supply is estimated to
be around E25.5bln, down from E16.608bln issued last week. First up on Monday
will be Germany who plan to issue new 6-month Sep 11, 2013 Bubill for up to
E4.0bln. In the afternoon France plan to re-open 3-month Jun 6 BTF for between
E3.6-E4.0bln, re-open 6-month Aug 8 BTF for between E1.4-E1.8bln and issue new
12-month Mar 6, 2014 BTF for between E1.6-E2.0bln. On Tuesday, Spain plan to
re-open 6-month Sep 20 Letra and issue new 12-month Mar 14, 2014 Letra, with
indicative target range to be announced on Monday. Italy plan to issue new
12-month Mar 14, 2014 BOT for E7.75bln. Belgium plan to tap 3-month Jun 30
T-bill and issue new 12-month Mar 13, 2014 T-bill for between E2.8-E3.3bln. In
terms of T-bill redemptions for this week, we have, France E6.89bln, Germany,
E4.0bln, Spain E12.406bln, Italy E8.685bln and Belgium E3.607bln giving
potential positive net cash flow of E10.1bln.
EUROZONE ISSUANCE: Sovereign bond issuance in the eurozone this week is
scheduled from Italy, Germany and the Netherlands -- expected to slow down to
E16.25bln vs E18.16bln last week. The Dutch State Treasury Agency (DSTA) kicks
off issuance on Tuesday with re-opening of its 3-year benchmark 0.00% Apr 2016
DSL issue for between E2.5bln-E3.5bln indicative size. Also on Tuesday, Germany
re-opens its 10-year linker 0.1% 2023 Bundei for up to E1.0bln. On Wednesday,
Germany re-opens its 2-year 0.25% Mar 2015 Schatz issue for up to E5.0bln and
Italy taps 3-year benchmark 2.75% 2015 BTP for between E2.5bn-E3.5bn, recently
issued 15-year 4.75% Sep 2028 BTP for between E1.5bn-E2.0bn and floater June
2017 CCTeu & Apr 2018 CCTeu for up to E1.75bln combined size. In terms of
reinvestment flows, redemption payment from Germany for E18.0bln and coupon
payments from Italy E1.7bln, Austria E1.4bln, Ireland E0.6bln, Germany E0.3bln
-- turns net cash flow positive to the tune of E5.8bln vs -E16.6bln last week.
For full details of forthcoming issues, please see Eurozone bond auction
calendar & MNI Eurozone Net Cash Flow Matrix.
GERMAN T-BILL AUCTION PREVIEW: The Deutsche Finanzagentur is planning to issue
up to E4.0bln new 6-month Bubill maturing Sep 11, 2013 on Monday. Current
6-month Bubill yield has bounced from recent lows in wake of less dovish
comments from ECB president Draghi, but still remain below the level seen at
last months auction. For comparison at the last 6-month T-bill auction back on
Feb 11, the treasury allotted E3.385bln at an average yield of 0.0203%, cover of
1.9 times, and with E615mln or 15% retained for secondary market operations. At
last months sale, the 6-month Eonia rate was around 0.1205%, therefore giving a
spread of -10.0bps, currently 6-month Eonia is seen around 0.08% level. There
will be a Bubill redemption of E4.0bln this week, leaving net cash flow flat.
Results due to be announced shortly after 1030GMT.
EUROZONE: Timeline of key events in the eurozone for next few weeks:
- Mar 11 Italy & Portugal Q4 final GDP data
- Mar 12 Italy sells 12-month T-bill for E7.75bln
- Mar 12 Spain sells 6-/12-month T-bills
- Mar 13 ECB 3-year LTRO repayment settlement
- Mar 13 ECB start of reserve maintenance period
- Mar 13 Italy sells 2015-/2028 BTP, 2017-/2018 CCTeu for up to E7.25bln
- Mar 14/15 European Council Summit
- Mar 14 ECB publishes monthly bulletin for March
- Mar 14 Italy T-bill redemption for E8.685bln
- Mar 15 Bank of Portugal to publish official bulletin
- Mar 15 Spain Q4 labour cost survey
- Mar 15 Spain T-bill redemption for E12.259bln
- Mar 15 First meeting of Italy Chamber & Senate (within 2-3 weeks of vote)
- Mar 18 Election of Presidents of each legislative chamber
- Mar 20 Deadline for Italy chambers to elect a speaker
US: Timeline of key events in the US for the next few days:
- Mar 11 Fed does $3Bn 28d TDF
- Mar 11 Treasury Cpn Purch Feb 15 2036-Feb 15 2043 $1.25-$1.75B
- Mar 11 UST announces 4wk at 1100ET
- Mar 11 UST auctions $35b 3m and $30b 6m bills at 1130ET
- Mar 12 Fed announces TDF results
- Mar 12 Outright TIPS Purchases Apr 15 2017-Feb 15 2043 $1.00-$1.5B
- Mar 12 Fed to buy TIPS, 2017-43, $1-1.5B
- Mar 12 SBC considers R. Cordray nom for CFPB Director & M.J. White for SEC
member
- Mar 12 UST auctions 4wk at 1130ET
- Mar 12 UST auctions $32b 3yr at 1300ET
- Mar 12 Feb Tsy Statement at 1400ET
- Mar 13 Treasury Cpn Purch Feb 15 2036-Feb 15 2043 $1.25-$1.75B
- Mar 13 UST auctions $21b 9y,11m reopen at 1300ET - Mar 14 Treasury Cpn Purch
May 15 2020-Feb 15 2023 $2.75-$3.50B
