Economic Data
(RU) Russia Narrow Money Supply w/e Aug 13th (RUB): 7.17T v 7.12T prior
(DE) Germany July Producer Prices M/M: 0.0% v 0.3%e; Y/Y: 0.9% v 1.2%e
(SE) Sweden July PES Unemployment Rate: 4.6% v 4.5%e
(SE) Sweden Q2 Industry Capacity: 88.2 v 88.2% prior
(EU) Euro Zone Jun Current Account nsa: +€15.7B v -€3.2B prior; Current Account Seasonally Adj: €12.7B v €10.3B prior
(TW) Taiwan Q2 Final GDP: -0.2% v -0.2%e
(GR) Greece June Central Govt Debt at €303.5B
(PL) Central/Eastern European Aug ZEW Indicator: -9.3 v -7.6 prior
(EU) Euro Zone Jun Trade Balance seasonally adj: €10.5B v €5.0Be; Trade Balance: €14.9B v €9.5Be
Fixed Income:
(IN) India sold total INR150B vs. INR150B indicated in 2020, 2026, 2032 and 241 bonds
(ZA) South Africa sold total ZAR800M in I/L 2025, 2038 and 2050 Bonds
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Notes/Observations
German Chancellor Merkel backs ECB's Draghi's condition to aid Europe
Finland's Foreign Min Tuomioja: Need to be prepared for the possibility of a euro break up but comments refuted by its European Affairs commissioner
Markets continue to expect that the PBoC will announce a rate cut to support the slowing economy
Equities
FTSE 100 +0.20% at 5847, DAX +0.25% at 7013, CAC-40 +0.24% at 3488, IBEX-35 +2.1% at 7568, FTSE MIB +1.7% at 15,185, S&P 500 Futures flat 1413.25
Although trading conditions have remained thin, European equity indices are trading higher led by the Spanish IBEX-35 and Italian FTSE-MIB, amid the sharp declines being seen in 2-year peripheral government bond yields, as Germany's Chancellor Merkel appeared to express support for ECB President Draghi's plans to support the euro zone. Overall, the comments made by Merkel on yesterday's session, were her first direct comments since mid July. European banks are trading broadly higher, and outperformers include Intesa [ISP.IT], Unicredit [UCG.IT] and Deutsche Bank [DBK.DE]. Additionally, resource related firms are mostly higher, despite the declines being seen for energy prices.
UK-listed platinum miner Lonmin [LMI.UK] is lower by over 4%, following reports that more than 20 people were killed during a clash between police officials and workers at the Marikana mine in South Africa. Melrose Resources [MRS.U] has gained over 3%, after disclosing a merger agreement with Petroceltic International [PCI.UK]. In Italy, Mediaset [MS.IT] is higher by over 2% on possible short covering and bid speculation. Lufthansa's [LHA.DE] shares are trading lower, amid concerns that the Berlin Airport project could face further delays. Shares of Bankia [BKIA.ES] are higher by over 6%, as a Spanish government official reiterated that the firm will soon receive some of its €19B in aid funds. Swiss Life [SLNH.CH] has gained over 3% after reporting better than expected H1 net profits. Shares of Air France [AF.FR] have gained over 4%, as more than 65% of its pilots agreed to support the firm's restructuring plan.
Speakers:
Finland European Affairs Min Stubbs commented that that Finland remained 100% committed to Europe and that the foreign minister's speculation of Euro break-up did not reflect government position. Budget discipline was critical for the Euro future and working on making sure countries were sticking to commitments. He noted that it was not helpful to speculate over Euro break up and that in the long run Europe would resolve its problems
German ruling CDU party parliamentary group chairman Fuchs reiterated the view that Greece would not receive additional aid if prior bailout agreement were not kept. It was up to Greece to decide on its EMU membership and he doubted that Germany would back a third Greek package. ECB could not keep helping Greece if the Troika verdict was negative and stressed that Germany faced growing risks from ECB bond buying
Greece PM Samaras was not expected to request program extension to its bailout program at next week meeting with Chancellor Merkel and would wait until Oct EU summit after Troika report was released
Spain June Bank Bad Loan Ratio: 9.4% v +9.0% prior; deposits -6.6% y/y (-5.8% prior)
Poland Fin Min Rostowski stated that the pace of reduction in budget deficit was slower than planned but was determined to reduce 2012 deficit to GDP below 3%
India PM Economic Panel cut its FY13 GDP forecast to 6.7% from prior view between 7.5-8.0% range and raised FY13 inflation forecast to 6.5-7.0% range from prior 5.0-6.0%
Currencies:
While European shares hit a five-month high during the session the EUR/USD remained locked within its August range with the session devoid of major scheduled events. The risk in risk appetite was putting some mild pressure on both the USD and JPY currencies against the European pairs. The EUR/USD stayed above the 1.2350 area aid by Thursday's comments from German Chancellor Merkel after she voiced support for ECB Draghi's crisis-fighting strategy. Finland European Affairs Min Stubb clarified that Finland remained 100% committed to Europe
The USD/JPY pair continued it technical advance as the pair moved above the 79.40 level.