Hello
EUROPE: Tuesday's calendar gets underway with a speech by Philadelphia Federal
Reserve Bank President Charles Plosser, talking on the on the economic outlook
in Stockholm. Also at 0600GMT, Germany's April final HICP data and the April
wholesale prices index. HICP could well show easing price pressures thanks to
recent falls in the oil price. On month, HICP is seen down 0.5%, up 1.1% y/y. At
0645GMT, the French March current account numbers will cross the wires, followed
by Spanish April final HICP numbers at 0700GMT and Italian HICP data at 0800GMT.
At 0800GMT, the IEA monthly oil market report will cross the wires. At 0900GMT,
the EMU March industrial output data and the German May ZEW survey will be
released. The latest ZEW survey for May will be released on Tuesday morning,
which may well give us a first taste of the impact of the recent ECB policy
action and the promise of more of the same on business sentiment in Germany.
Analysts are looking for the sentiment indicator to come in at 40.0 and Store
Sales for the May 11 week are due for release. At 1600GMT, ECB Executive Board
member Joerg Asmussen will deliver a speech on the future of banks, in Berlin.
FRANCE: French support for the EU has fallen sharply, a survey for the Pew
Research Centre shows, falling to 41%, down from 60% a year ago. The report
shows even Eurosceptic Britain with a more favourable view of the EU at 43%.
UK: At 0930GMT, in the UK, Chancellor George Osborne leads Treasury questions,
in the Commons. The March OECD leading indicators data will be released at
1000GMT.
UK PRESS: The FT says UK PM Cameron is set to "allow" Tory backbenchers to lay
down a private members bill to establish a 2017 EU referendum in law. However,
the paper says the PMB has little chance of success, as it will be voted down by
both LibDems and Labour, even if LibDem Deputy PM Clegg allows the bill
parliamentary time - which he won't.
UK PRESS: The FT says the French government is set to tax smartphones, tablets
etc to help fund ""the protection and production of French art, films and music.
A French minister said the taxation would be at a "very low level."
UK PRESS: The "black hole" at the Co-Op Bank, a UK mutual, could be as large as
stg1.8 billion, the Telegraph says, almost twice the size of initial estimates.
The paper says the bank is talking to regulators concerning the capital
shortfall and could seek a government bailout.
UK PRESS: UK gas supplier British Gas says it will cap gas prices against
wholesale rises in coming months, as it reports a bumper rise in profits
following the cold winter in the UK, the Independent says.
US:At 1145GMT, the ICSC-Goldman Store Sales for the May 11 week are due for
release.
This is followed by the release of the April Import and Export prices data at
1230GMT.
At 1255GMT, the Redbook Average for the May 11 week will hit traders screens.
EURO SUMMARY: Euro-dollar closed in NY Monday at $1.2976 after rate had
recovered off session lows of $1.2942 to $1.3000 before drifting lower into the
close. Rate opened Asia with a buoyant tone, some linking this view to UST
redemptions and coupon payments for Wednesday ($18.2bln 10-yr UST, coupon
$330mln; $41bln 3-yr UST, coupon 284mln). The break above $1.2995/1.3000 began a
series of stop triggering which provided the added momentum to take rate on to
overnight highs of $1.3026. Reported stops through $1.3035/50 remained intact.
Rate eased off highs, met initial support at $1.3014 before settling between
$1.3005/15 through the Asian afternoon, trading around $1.3010 into Europe.
Eurozone IP and Germany ZEW at 0900GMT seen as focus data this morning (several
EZ countries release inflation data as well), with a fairly light US calendar
for this afternoon. Support $1.3000/1.2990 (50%/61.8% $1.2942-1.3026) ahead of
$1.2978 (76.4%). Offers now seen placed between $1.3025/35 with those mentioned
stops through $1.3035/50, though traders note that decent sell interest then
emerges above the $1.3050 level.
EURO-DOLLAR: Fundamental levels (orders, options, technicals)
$1.3095/100 Medium offers
$1.3050-70 Strong offers
$1.3035-50 Stops
$1.3025/35 Medium offers
$1.3026 Int.Day high Asia
$1.3005-10 Tech 40-dma, 55-dma
$1.3003 ***Current mkt rate 0639GMT Tuesday
$1.2998 Tech 200-dma
$1.2970 Int.Day low Asia
$1.2941 Monday May13 low
$1.2935 Strong demand/61.8% $1.2745-1.3243; Fri May10 low
$1.2932 Tech Daily cloud base
$1.2915/00 Medium demand
$1.2880/75 Medium demand
$1.2860/50 Strong demand/$1.2845 Stops
STERLING SUMMARY: Cable closed in NY at $1.5295 after rate recovered off
extended pullback lows of $1.5275, with offers into $1.5300 capping the recovery
effort. Early demand into Asia lifted rate through $1.5300 with momentum able to
extend the recovery on to $1.5331.
Some potential M&A flows aided the move,
traders watching out for developments to reported early talks between UK Severn
Trent and Canadian Borealis and the Kuwait Investment Authority. Traders also
noted Vodafone's potential stg2.1bln dividend from its part owner ship in
Verizon Wireless, payment to be made in June. Macro sell interest reported to
have provided the main resistance overnight at the highs, the rate drifting back
to $1.5311 before settling between $1.5311/20. Euro-sterling saw highs in the NY
session of stg0.8493, closed the session at stg0.8479 before Asia took it above
stg0.8500 and on to stg0.85045 before momentum faded. Rate slipped back below
the figure ahead of the European open, meeting support at Monday's NY high of
stg0.8493. Cross offers seen between stg0.8500/10, stg0.8530/35. Cable support
seen at $1.5295/90 ahead of $1.5275/65 and $1.5250. Resistance $1.5330/35 ahead
of $1.5350/60.
YEN SUMMARY: Dollar-yen closed in NY at Y101.78 after rate had seen highs in
this session of Y102.05, seen as a reaction to the release of stronger than
forecast US retail sales data though move failed to retest earlier Asian highs
of Y102.15. Rate edged to Y101.85 in early Asia before Tokyo reversed this early
move, the move down through Y101.70 providing the initial momentum that allowed
traders to turn attention toward stops below Y101.50. Triggered stops through
Y101.50/45 provided the added weight to take rate to extended lows of Y101.37.
Rate recovered to Y101.70 but again met a wave of sell interest which pressed
rate back toward the overnight lows into early Europe. Rate currently trades
around Y101.40. Traders note next support at Y101.25/20 with more stops below.
Further demand into Y101.00, with stops below beginning from around Y100.98.
Resistance remains up at Y102.05/25. Euro-yen tracked dollar-yen moves, edging
to an overnight high of Y132.29 before pressing down to Y131.85 into Europe.
JAPAN STOCKS CLOSE: Japan's benchmark stocks are little Tuesday, with the Nikkei
225 ending just shy of the record 5-year high. The Nikkei 225 was lower by 23.79
points, or 0.16%, at 14758.42. Into the close, the broader-based TOPIX was
higher by 0.5 points at 1232.5. Market breadth indicators saw 106 issues higher,
106 lower and 13 unchanged. Preliminary volume stood at 2.675 bn shares.
OPTIONS: FX: Option expiries for today's 1000ET cut,
* Euro-dollar; $1.2950, $1.2975, $1.3000, $1.3050
* Dollar-yen; Y100.35, Y101.00, Y101.50, Y102.00
* Euro-yen; Y131.00, Y132.00
* Cable; $1.5350, $1.5375
* Aussie; $0.9900, $0.9970, $1.0000, $1.0040, $1.0200
* Aussie-Kiwi; NZ$1.1980
EUROZONE ISSUANCE: The Dutch State Treasury Agency (DSTA) re-opens its 5-year
benchmark 1.25% Jan 2018 DSL Tuesday for between E1.5bln-E2.5bln. Overall,
sovereign issuance in the eurozone is estimated to come in around E24.0bln vs
E14.89bln sold last week. Italy kicked off supply on Monday, with tap of its
3-year benchmark 2.25% May 2016 BTP for E3.5bln, off-the-run 4.50% Mar 2026 BTP
for E1.5bln and new floater Nov 2018 CCTeu for E3.0bln. Looking ahead, Germany
sells a new 2-year benchmark June 2015 Schatz issue on Wednesday for up E5.0bln.
On Thursday, France taps its 2-year benchmark 0.25% Nov 2015 OAT, 3.75% Apr 2017
OAT and 5-year benchmark 1.00% May 2018 OAT issue for between E7.0bln-E8.0bln
along with linker issues -- 0.25% July 2018 OATei, 1.30% July 2019 OATi, 0.25%
July 2024 OATei for between E800mln-E1.2bln. In terms of reinvestment flows,
there are no redemptions due this week, with moderate coupon payments from Italy
E0.435bln - leaves net cash flow negative to the tune of E24.065bln vs -E14.8bln
last week. For full details of forthcoming issues, please see eurozone bond
auction calendar & MNI Eurozone Net Cash Flow Matrix.
EUROZONE T-BILL ISSUANCE: There is a full calendar of T-bill issuance planned
for Tuesday with Spain first up with plans to re-open 6-month Nov 22 Letra and
issue new 12-month May 16, 2014 Letra for between E3.0-E4.0bln. Greece plan to
issue new 13-week Aug 16, 2013 T-bill for E1.0bln. Belgium plan to tap 3-month
Aug 15 T-bill and issue new 12-month May 15, 2014 T-bill for between
E1.7-E2.1bln. Finally Slovenia plan to re-open 3-month Aug 16 T-bill and issue
new 6-month Nov 14 T-bill for up to E60mln. To recap so far this week, on
Monday, Germany sold E3.82bln 6-month bubill at average yield 0.0013%. In the
afternoon France sold E4.195bln 3-month BTF at average yield 0.005%, E1.995bln
6-month BTF at average yield 0.014% and E1.795bln 12-month BTF at average yield
0.033%. Still to come, Portugal plan to issue new 6-month Nov 22 T-bill and
re-open 12-month May 23, 2014 T-bill for between E1.5-E1.75bln. On Thursday
there is a possibility Ireland will issue new 3-month T-bill for E500mln,
details of which would be announced on Tuesday.
DUTCH AUCTION PREVIEW: The Dutch State Treasury Agency (DSTA) re-opens its
5-year benchmark 1.25% Jan 2018 DSL Tuesday for between E1.5bln-E2.5bln
indicative size. The 5-year DSL yield trading at 0.608% mid-yield -- just above
recent rich level of 0.48%. This is the last re-opening of the 1.25% 2018 DSL --
current size outstanding of E13.758bln, with the DSTA scheduled to launch a new
5-year DSL via DDA on June 25. This 5-year DSL issue was last sold on Mar 26 for
E2.23bln at an average yield of 0.73%. Prior to this it was sold on Feb 12 for
E2.69bkn at an average yield of 0.88%. Overall, the DSTA has made a strong start
in its issuance programme, having so far sold E23.04bln worth of DSL bonds and
achieved around 46% of its 2013 capital market issuance target, according to MNI
calculations.
Auction results are due around 0820GMT.
SPAIN T-BILL AUCTION PREVIEW: Spain's Tesoro Publico will re-open 6-month Nov
22, 2013 Letra and issue new 12-month May 16, 2014 Letra for an indicative
amount of E3.0-E4.0bln Tuesday. Spanish Letra yields have pared back some on the
gains it saw over the latter half of April and early May, but yields are still
seen at low levels. The 6-month mid-yield is currently seen at 0.535bps while at
the last 6-month auction back on Apr 16, the Tesoro sold E1.191bln at average
yield of 0.53% with cover 3.77 times. As for new 12-month May 16, 2014 Letra,
the grey market is indicating a mid-yield of around 0.99%, while at the last
12-month Letra auction also on Apr 16, the Tesoro sold E3.878bln at average
yield 1.235% and covered 2.04 times. With E7.34bln already outstanding demand
for the 6-month Letra could be low, while the new 12-month Letra could attract
high Demand with yield being close to 1.0%. A Letra redemption of E5.683bln is
also seen as underpinning demand, especially for the new 12-month T-bill.
Results are due to be announced around 0840GMT.
GREECE T-BILL AUCTION PREVIEW: Greece's Public Debt Management Agency (PDMA) is
planning to issue E1.0bln new 13-week Aug 16, 2013 T-bill Tuesday. The Eurozone
Finance ministers agreed to release a loan tranche of E4.2 billion to Greece,
but held back more than E3 billion in order to allow Greece more time to meet
certain austerity targets. There is a very small possibility that the average
yield could fall below 4% for the first time since Feb 15, 2011 as average yield
at the last week's 26-week T-bill auction fell 5bps to 4.20%. While at the last
13-week T-bill auction on Apr 16 the PDMA sold E1.625bln at an average yield of
4.05% and bid-to-cover of 1.65 times. The PDMA will once again allocate an extra
30% of amount auctioned, in non-comp bids and a further 30% in second day bids,
to bring total amount to be issued to E1.6bln. There will be a E1.6ln T-bill
redemptions on May 17, which is seen underpinning demand at the auction.
Results
due to be announced around 0910GMT.
BELGIUM T-BILL AUCTION PREVIEW: Belgium's Debt Agency re-opens a 3-month T-bill
maturing Aug 15, 2013, and issue new 12-month T-bill maturing May 15, 2014 for
an indicative amount of between E1.7-E2.1bln on Tuesday. This will be the second
of two taps of the Aug 15 T-bill, and with E4.091bln outstanding, demand is
expected to be on the high side. Mid-yield is currently seen trading around
0.025%, while at the last 3-month T-bill auction on Apr 30 the Belgium Treasury
allotted E775mln at average yield -0.001% and covered 5.01 times. As for the new
12-month May 15, 2014 T-bill, this is not scheduled to be tapped again until
early December, and therefore could see high demand. In the grey market
mid-yield is currently seen around 0.065%, while at the last 12-month T-bill
auction on Apr 16 E1.602bln was allotted at average yield of 0.08% and covered
2.45 times. There will be a T-bill redemption of E3.746 this week leaving
potential net cash flow positive to the tune of E2.0bln, plus The small
indicative size of the auction and the fact that there will only be one auction
in May, instead of the usual two, is seen as underpinning demand.
Results are
due to be announced around 0940GMT.
EUROZONE: Timeline of key events in the eurozone for next few weeks:
- May 14 EcoFin meeting
- May 14 Spain sells 6-/12-month T-bills for between E3.0bln-E4.0bln
- May 14 Italy T-bill redemption for E7.0bln
- May 14 German Chancellor Merkel, FinMin Schauble speak at demographic summit
- May 14 Germany Merkel talks at CDU Media Night
- May 15/19 Greek PM Samaras travels to China
- May 15 Eurozone flash Q1 GDP data
- May 15 Germany Apr Target2 data and central bank lending figures
- May 15 EU President Barroso, France President Hollande in Brussels
- May 15 Portugal sells 6-/12-month T-bills for up to E1.75bln
- May 15 Portugal IGCP debt chief Rato speaks to parliamentary commission
- May 17 Greece Apr Target2 data and central bank lending figures
- May 17 Portugal T-bill redemption for E2.398bln
- May 17 Spain T-bill redemption for E5.684bln
- May 17 Greek T-bill redemption for E1.6bln
EU: Indicative programme for EcoFin in Brussels on May 14:
0900GMT - Meeting of EU's Council of Economic and Finance Ministers, under the
presidency of Irish FinMin Michael Noonan. The following items will be discussed
at this session:
- Banking Recovery and Resolution; discuss the architecture of the banking union
- Proposal for a Directive of the European Parliament and of the Council
establishing a framework for the recovery and resolution of credit institutions
and investment firms
- Draft Amending Budget No 2 to the General Budget 2013
- Fighting tax fraud and evasion
- Cross-border automatic exchange of information
- Macroeconomic Imbalances Procedure: in-depth reviews
- Towards a deep and genuine economic and monetary union
- Follow-up to G20 Meeting of Finance Ministers and Governors
? - Press conference at the end of the EcoFin meeting
US: Timeline of key events in the US for the next few days:
- May 14 NY Fed Q1 report on household debt at 1100ET
- May 14 Tsy Cpn Purchases May 15 2020-Feb 15 2023 $2.75-$3.50B
- May 14 Fed Plosser (non-voter) at SNS in Stockholm at 0200ET
- May 14 Fannie Mae to announce Benchmark Note issuance
- May 14 UST auctions 4wk at 1130ET
- May 15 Mar Tsy Intl Capital System at 0900ET
- May 15 Tsy Cpn Purchases Aug 15 2023-Feb 15 2031 $0.75-$1.00B
- May 16 Fed Plosser (non-voter) in Milan at 0345ET
- May 16 Fed Fisher (non-voter) on monpol at NABE in Houston, TX at 0900ET
- May 16 Tsy Cpn Purch Feb 15 2036-May 15 2043 $1.25-$1.75B
- May 16 UST announces 3/6m bills, 10y TIPS at 1100ET
- May 16 Fed Williams (non-voter) in Portland, OR at 1430ET
- May 16 Money Supply (M2) at 1630ET
- May 17 Outright Tsy Cpn Purch Feb 28 2018-Feb 15 2019 $4.75-$5.75b
- May 17 Fed Kocherlakota (non-voter) at UChic Booth at 1345ET
