Spain sells more than expected despite political concerns in bond auction although at a higher cost; UK production data beats expectations; Incoming BOE Gov Carney presents a more hawkish tone
Notes/Observations
Australia Jan Employment data comes in better-than-expected
India GDP suffers a big miss at 5.0% vs. 5.5%e
-OECD's Gurria: BoE should buy more debt if UK growth is still weak
Chancellor Osborne calls for looser BOE monetary policy to increase economic growth
Irish Govt plans to liquidate Anglo Irish as part of Bank solution
ECB's Draghi not expected to surprise markets to press conference; Dealers FX topic more appropriate at upcoming G20 meeting
UK Dec Industrial and Manufacturing Production data comes in better than expected
Spain sells more than expected despite political concerns in bond auction although at a higher cost
BOE Governor-Designate Carney comments to Parliament turn more hawkish than is Davos views from a few week ago
Economic Data
(ZA) South Africa Jan Gross Reserves: $51.2 v $51.0Be; Net Reserves: $48.1 v $48.0Be
(CH) Swiss Jan SECO Consumer Confidence: -6 v -12e
(FI) Finland Dec Preliminary Trade Balance: -€735M v +€180M prior
(FR) France Dec Trade Balance: -€5.4B v -€4.2Be
(TW) Taiwan Jan Total Trade Balance: $0.5B v $3.5Be
(HU) Hungary Dec Preliminary Industrial Production M/M: -2.5% v -0.4% prior; Y/Y: -3.4% v -4.0%e
(DK) Denmark Dec Industrial Production M/M: -3.8% v 0.0%e; Industrial Orders M/M: -14.4% v +5.9% prior
(CH) Swiss Jan Foreign Currency Reserves (CHF): 427.0B v 428.3Be
(ES) Spain Dec Industrial Output WDA Y/Y: -6.9% v -6.9%e; Industrial Output NSA Y/Y: -8.5% v -7.0% prior
(EU) ECB: €2M borrowed in overnight loan facility vs. €105M prior; €162.1B parked in deposit facility vs. €178.0B prior
(SE) Sweden Dec Average House Prices (SEK): 2.160 v 2.091M prior
(SE) Sweden Jan Budget Balance (SEK): -96.3B v -79.3B prior
(SG) Singapore Jan Foreign Reserves: $258.9B v $259.3B prior
(CZ) Czech Jan International Reserves: $45.8B v $44.9B prior
(HK) Hong Kong Jan Foreign Currency Reserves: $321.0B v $317.3B prior
(DE) Germany Q4 Wages Y/Y: +3.2% v 3.0% prior
(UK) Dec Industrial Production M/M: 1.1% v 0.9%e; Y/Y: -1.7% v -2.0%e
(UK) Dec Manufacturing Production M/M: 1.6% v 0.8%e; Y/Y: -1.5% v -2.4%e
(UK) Dec Visible Trade Balance: -£8.9B v -£8.9Be; Total Trade Balance: -£3.2B v -£3.2Be; Trade Balance Non EU: -£4.2B v -£4.2Be
(ZA) South Africa Jan SACCI Business Confidence: 94.0 v 93.0 prior
UN Foods and Agricultural Organization (FAO): Jan Food Price Index: 210.0 v 209.0 prior
Fixed Income
(ES) Spain Debt Agency (Tesoro) sold total €4.61B vs. €3.5-4.5B indicated range in 2015, 2018 and 2029 Bonds
Sold €1.948B in March 2.75% 2015 Bono bond; Avg Yield 2.823% v 2.476% prior; Bid-to-cover: 2.21x v 2.07x prior; Maximum Yield 2.889% v 2.58% prior; Tail 6.6bps v 11.1bps prior
Sold €2.07B in Jan 4.5% 2018 Bono Bond; Avg Yield 4.123% v 3.770% prior; Bid-to-cover: 2.24x v 2.32x prior; Maximum Yield 4.169% v 3.808% prior; Tail 4.6bps v 3.8bps prior
Sold €593M in 6% Jan 2029 bonds; Avg Yield: 5.787% v 4.86% prior, bid-to-cover 2.02x v 2.22x prior; Maximum Yield 5.822%; Tail 3.5bps
(FR) France Debt Agency (AFT) sold total €7.98B vs. €7.0-8.0B indicated range in Oats
Sold €1.77B in 2.5% 2020 Oats; Avg Yield 1.83% v 2.91% prior; Bid-to-cover: 3.64x v 3.99x prior
Sold €3.02B in 2.25% Oct 2022 OAT; Avg Yield 2.30% v 2.07% prior; Bid-to-cover: 3.09x v 1.72x prior
Sold €3.19B in 2.75% Oct 2027 OAT ; Avg Yield 2.85% v 2.56% prior; Bid-to-cover: 1.79x v 3.53x prior
(HU) Hungary Debt Agency (AKK) sold total HUF50B in 2016, 2018 and 2023 Bonds
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices: FTSE 100 +0.10% at 6,299, DAX +0.25% at 7,600, CAC-40 +0.40% at 3,655, IBEX-35 +0.90% at 8,130, FTSE MIB +0.70% at 16,725, SMI -0.40% at 7,407, S&P 500 Futures +0.20% at 1,509
European equity markets are mostly higher, as traders digest the plethora of earnings results released during the session and bond auction results out of Spain. Markets are also focusing on upcoming interest rate decisions from the BoE and ECB. In terms of sectors, banks are mixed. French, Italian and Spanish banks have outperformed while German and UK financials have underperformed. Resource-related companies are mixed, in line with what has been seen with commodity prices.
Germany movers [Lanxess +4% (takeover speculation),HeidelbergCement +4% (Q4 results),Daimler +2.8% (Q4 results, reaffirmed dividend),Air Berlin +2.5% (Jan traffic data),Hochtief +1.7% (ACS mulling sale of solutions unit);Wacker Chemie -1.4% (Q4 results)]
UK movers [Punch Taverns +25% (reviewing capital structure),Thomas Cook +10.5% (Q1 results), SuperGroup +8% (Q3 sales) Ocado +6.5% (FY results), Bellway +4% (trading update), Vodafone +2% (Q3 sales), Smith & Nephew +0.60% (Q4 results);Burberry -4% (planned CFO change), ICAP -1.4% (Q3 update)]
France movers [Alcatel-Lucent +6.5% (Q4 results, CEO change),Scor +4% (Jan premiums data),Dassault Systems +1% (Q4 sales); Sanofi -2.3% (Q4 results)]
Italy movers [Saipem +5.5% (expected to issue statement on FY13 guidance), Banca Monte Paschi +4% (derivatives update), Telecom Italia +1.6% (ahead of prelim results)]
Switzerland movers [Credit Suisse +2% (Q4 results, cost cuts)]
Notes/Observations
Australia Jan Employment data comes in better-than-expected
India GDP suffers a big miss at 5.0% vs. 5.5%e
-OECD's Gurria: BoE should buy more debt if UK growth is still weak
Chancellor Osborne calls for looser BOE monetary policy to increase economic growth
Irish Govt plans to liquidate Anglo Irish as part of Bank solution
ECB's Draghi not expected to surprise markets to press conference; Dealers FX topic more appropriate at upcoming G20 meeting
UK Dec Industrial and Manufacturing Production data comes in better than expected
Spain sells more than expected despite political concerns in bond auction although at a higher cost
BOE Governor-Designate Carney comments to Parliament turn more hawkish than is Davos views from a few week ago
Economic Data
(ZA) South Africa Jan Gross Reserves: $51.2 v $51.0Be; Net Reserves: $48.1 v $48.0Be
(CH) Swiss Jan SECO Consumer Confidence: -6 v -12e
(FI) Finland Dec Preliminary Trade Balance: -€735M v +€180M prior
(FR) France Dec Trade Balance: -€5.4B v -€4.2Be
(TW) Taiwan Jan Total Trade Balance: $0.5B v $3.5Be
(HU) Hungary Dec Preliminary Industrial Production M/M: -2.5% v -0.4% prior; Y/Y: -3.4% v -4.0%e
(DK) Denmark Dec Industrial Production M/M: -3.8% v 0.0%e; Industrial Orders M/M: -14.4% v +5.9% prior
(CH) Swiss Jan Foreign Currency Reserves (CHF): 427.0B v 428.3Be
(ES) Spain Dec Industrial Output WDA Y/Y: -6.9% v -6.9%e; Industrial Output NSA Y/Y: -8.5% v -7.0% prior
(EU) ECB: €2M borrowed in overnight loan facility vs. €105M prior; €162.1B parked in deposit facility vs. €178.0B prior
(SE) Sweden Dec Average House Prices (SEK): 2.160 v 2.091M prior
(SE) Sweden Jan Budget Balance (SEK): -96.3B v -79.3B prior
(SG) Singapore Jan Foreign Reserves: $258.9B v $259.3B prior
(CZ) Czech Jan International Reserves: $45.8B v $44.9B prior
(HK) Hong Kong Jan Foreign Currency Reserves: $321.0B v $317.3B prior
(DE) Germany Q4 Wages Y/Y: +3.2% v 3.0% prior
(UK) Dec Industrial Production M/M: 1.1% v 0.9%e; Y/Y: -1.7% v -2.0%e
(UK) Dec Manufacturing Production M/M: 1.6% v 0.8%e; Y/Y: -1.5% v -2.4%e
(UK) Dec Visible Trade Balance: -£8.9B v -£8.9Be; Total Trade Balance: -£3.2B v -£3.2Be; Trade Balance Non EU: -£4.2B v -£4.2Be
(ZA) South Africa Jan SACCI Business Confidence: 94.0 v 93.0 prior
UN Foods and Agricultural Organization (FAO): Jan Food Price Index: 210.0 v 209.0 prior
Fixed Income
(ES) Spain Debt Agency (Tesoro) sold total €4.61B vs. €3.5-4.5B indicated range in 2015, 2018 and 2029 Bonds
Sold €1.948B in March 2.75% 2015 Bono bond; Avg Yield 2.823% v 2.476% prior; Bid-to-cover: 2.21x v 2.07x prior; Maximum Yield 2.889% v 2.58% prior; Tail 6.6bps v 11.1bps prior
Sold €2.07B in Jan 4.5% 2018 Bono Bond; Avg Yield 4.123% v 3.770% prior; Bid-to-cover: 2.24x v 2.32x prior; Maximum Yield 4.169% v 3.808% prior; Tail 4.6bps v 3.8bps prior
Sold €593M in 6% Jan 2029 bonds; Avg Yield: 5.787% v 4.86% prior, bid-to-cover 2.02x v 2.22x prior; Maximum Yield 5.822%; Tail 3.5bps
(FR) France Debt Agency (AFT) sold total €7.98B vs. €7.0-8.0B indicated range in Oats
Sold €1.77B in 2.5% 2020 Oats; Avg Yield 1.83% v 2.91% prior; Bid-to-cover: 3.64x v 3.99x prior
Sold €3.02B in 2.25% Oct 2022 OAT; Avg Yield 2.30% v 2.07% prior; Bid-to-cover: 3.09x v 1.72x prior
Sold €3.19B in 2.75% Oct 2027 OAT ; Avg Yield 2.85% v 2.56% prior; Bid-to-cover: 1.79x v 3.53x prior
(HU) Hungary Debt Agency (AKK) sold total HUF50B in 2016, 2018 and 2023 Bonds
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
Indices: FTSE 100 +0.10% at 6,299, DAX +0.25% at 7,600, CAC-40 +0.40% at 3,655, IBEX-35 +0.90% at 8,130, FTSE MIB +0.70% at 16,725, SMI -0.40% at 7,407, S&P 500 Futures +0.20% at 1,509
European equity markets are mostly higher, as traders digest the plethora of earnings results released during the session and bond auction results out of Spain. Markets are also focusing on upcoming interest rate decisions from the BoE and ECB. In terms of sectors, banks are mixed. French, Italian and Spanish banks have outperformed while German and UK financials have underperformed. Resource-related companies are mixed, in line with what has been seen with commodity prices.
Germany movers [Lanxess +4% (takeover speculation),HeidelbergCement +4% (Q4 results),Daimler +2.8% (Q4 results, reaffirmed dividend),Air Berlin +2.5% (Jan traffic data),Hochtief +1.7% (ACS mulling sale of solutions unit);Wacker Chemie -1.4% (Q4 results)]
UK movers [Punch Taverns +25% (reviewing capital structure),Thomas Cook +10.5% (Q1 results), SuperGroup +8% (Q3 sales) Ocado +6.5% (FY results), Bellway +4% (trading update), Vodafone +2% (Q3 sales), Smith & Nephew +0.60% (Q4 results);Burberry -4% (planned CFO change), ICAP -1.4% (Q3 update)]
France movers [Alcatel-Lucent +6.5% (Q4 results, CEO change),Scor +4% (Jan premiums data),Dassault Systems +1% (Q4 sales); Sanofi -2.3% (Q4 results)]
Italy movers [Saipem +5.5% (expected to issue statement on FY13 guidance), Banca Monte Paschi +4% (derivatives update), Telecom Italia +1.6% (ahead of prelim results)]
Switzerland movers [Credit Suisse +2% (Q4 results, cost cuts)]