Refinancing Costs Rise In Italian And Spanish Auctions

(DE) Germany July GfK Consumer Confidence Survey: 5.8 v 5.6e

(FI) Finland May Preliminary Retail Sales Volume Y/Y: 0.0% v -2.2% prior

(FI) Finland May Unemployment Rate: 9.5% v 8.4% prior

(CH) Swiss May UBS Consumption Indicator: 1.05 v 1.37 prior

(FR) France June Consumer Confidence Indicator: 90 v 89e

(ZA) South Africa April Leading Indicator: 131.9 v 134.5 prior

(NL) Netherlands Q1 Final GDP Q/Q: +0.3% v -0.2%e; Y/Y: -0.8% v -1.1%e

(SE) Sweden May PPI M/M: -0.5% v -0.2%e; Y/Y: 0.3% v 0.6%e

(IT) Italy April Retail Sales M/M: -1.6% v -0.6%e; Y/Y: -6.8% v -0.1%e

(PL) Poland May Retail Sales M/M: 0.9% v 0.7%e; Y/Y: 7.7% v 7.5%e

(PL) Poland May Unemployment Rate: 12.6% v 12.6%e

(UK) May Public Finances (PSNCR): -£4.4B v +£4.0Be; Public Sector Net Borrowing: +£15.6B v +£14.0Be; PSNB ex Interventions: +£17.9B v +£14.8Be

(HK) Hong Kong May Trade Balance (HKD): -35.6B v -38.1Be; Exports Y/Y: 5.2% v 0.5%e; Imports Y/Y: 4.6% v 2.2%e

(IT) Italy May Hourly Wages M/M: 0.0% v 0.3% prior; Y/Y: 1.4% v 1.4% prior

Fixed Income

(NL) Netherlands Debt Agency (DSTA) sold €2.17B vs.€2.0-3.0B indicated range in 2.25% July 2022 DSL Bonds; averag eYield 1.995% v 2.139% prior.

(ES) Spain Debt Agency (Tesoro) sold €3.08B vs. €2.0-3.0B indicated range in 3-month and 6-month bills.

Sells €1.6B in 3-month Bills; average Yield 2.362% v 0.846% prior; Bid-to-cover: 2.60x v 3.95x prior; Max Yield 2.500% v 0.879% prior.

Sells €1.48B in 6-month Bills; average Yield 3.237% v 1.737% prior; Bid-to-cover: 2.82x v 4.3x prior; Max Yield 3.369% v 1.793% prior.

(IT) Italy Debt Agency (Tesoro) sold €2.991B vs. €2.0-3.0B indicated Range in May 2014 Zero Coupon CTZ; Avg Yield 4.712% v 4.037% prior; Bid-to-cover:1.65xx v 1.66x prior.

(EU) ECB allotted €180.4B in main 7-day Refinancing Tender at fixed 1.0% vs. €169Be.

(IT) Italy Debt Agency (Tesoro) sold total €916M vs. €0.5-1.0B in I/L 2016 and 2026 BTPi.

Sold €290M in 2.1% I/L Sept 2016 BTPi Bonds; yield 5.20% v 4.39% prior; bid-to-cover: 2.22x v 2.30x prior.

Sold €626M in 3.1% Sept 2026 BTPi Bond; average Yield 5.29%; Bid-to-cover: 2.43x.

(ZA) South Africa sold 2023, 2031 and 2048 Bonds.

(HU) Hungary Debt Agency (AKK) sold HUF55B in 3-month Bills; average Yield 7.10% v 7.14% prior; Bid-to-cover: 2.41x v 1.89x prior.

(UK) DMO sold £1.25B in 0.125% I/L March 2029 Gilts; Real Yield -0.108% v -0.045% prior; Bid-to-cover:1.83x v 1.70x prior.

Notes/Observations

EU seeks to move towards fiscal union at upcoming summit.

Market is beginning to accept that the process of European integration will be a slow and bumpy ride.

Cyprus become fifth European bailout victim.

Moody's downgrades 28 Spain banks from 1 to 4 notches sighting govts reduced ability to support them.

Focus shifts to Italy after banking sector asked ECB to reactivate SMP program.

German Gfk consumer confidence Survey rises in July.

Month-end rotational trade into equities from bonds tried to help overall sentiment.

Spain Bill yields surge in auction as bid-to-cover slumps.

Equities

Indices: FTSE 100 -0.10% at 5447, DAX -0.05% at 6129, CAC-40 -0.30% at 3013, IBEX-35 -0.40% at 6595, FTSE MIB -0.50% at 13,053, SMI -0.25% at 5930, S&P 500 Futures +0.10% at 1308.

European equity indices are trading off of the session's highs following bill auction results out of Spain, after opening mixed. In the banking sector, Italian and UK banks have underperformed so far on the session. Overall, the focus for markets continues to be the Thursday/Friday EU summit.

Following the weakness seen on yesterday's session for Italian banks, shares of Banca Monte Paschi [BMPS.IT] has moved between gains and losses in an overall volatile trading session. According to an Italian press report, the bank could require state aid, as it has until the end of June to meet the EBA's capital requirements. In London, shares of retailer Ocado [OCDO.UK] have lost over 7%, as the company reported H1 results and gave a cautious outlook for Q3. Small cap name Wolfson Microelectronics [WLK.UK] is higher by over 4%, as the company was selected to supply components for Samsung's new Galaxy smartphone.

Stagecoach [SGC.UK] is higher by over 3% after issuing tis FY11/12 results, while Carpetright [CPR.UK] has gained by more than 4.5% after reporting its full year results. In other UK movers, Petrofac [PFC.UK] is higher by ~1.5%, as the company reaffirmed that it is on track to have 2012 net profit growth of at least 15%. In Germany Porsche [PAH3.DE] is lower by ~2.5%, as the company is trading ex-dividend. Swiss name Adecco [ADEN.CH] is higher by over 2.5%, after announcing a share buyback. In Spain, Bankia [BKIA.ES] is lower by over 2%, as Moody's downgraded the ratings of 28 Spanish banks.