Spanish Bonds Outperform As Bailout Speculation Persists

(EU) EURO ZONE AUG PPI M/M: 0.9% V 0.6%E; Y/Y: 2.7% V 2.6%E

(UK) SEPT PMI CONSTRUCTION: 49.5 V 49.9E

(ES) SPAIN SEPT NET UNEMPLOYMENT M/M: +79.6K V +57KE

(ZA) SOUTH AFRICA SEPT NAAMSA VEHICLE SALES Y/Y: 1.4% V 9.4% PRIOR

(RO) ROMANIA AUG RETAIL SALES M/M: 0.7% V 0.6% PRIOR; Y/Y: 4.7% V 4.4% PRIOR

(RO) ROMANIA AUG PRODUCER PRICES M/M: 1.3% V 0.9% PRIOR; Y/Y 7.2% V 5.7% PRIOR

(HU) HUNGARY JULY FINAL TRADE BALANCE: €431M V €457.5M PRELIM

(UK) SEPT NATIONWIDE HOUSE PRICES M/M: -0.4% V 0.0%E; Y/Y: -1.4% V -0.6%E

(AU) AUSTRALIA SEPT RBA COMMODITY PRICE INDEX AU: 90.1 V 89.2 PRIOR; COMMODITY INDEX SDR Y/Y: -14.9% V -14.7% PRIOR

(EU) ECB: €2.4B borrowed in overnight loan facility v €2.05B prior; €294.9B parked in deposit facility vs. €315.8B prior

Fixed Income
(AT) Austria Debt Agency (AFFA) sells combined €1.32B v €1.32B indicated in 2019 and 2044 bonds

(BE) Belgium sells total €3.01B vs. €2.8-3.2B indicated in 3-month and 6-month Bills

(CH) SWITZERLAND SELLS CHF748.7M V CHF747.8M PRIOR IN 3-MONTH BILLS, AVG YIELD -0.221% V -0.221% PRIOR

(EU) ECB ALLOTS €102.9B V €117.4B PRIOR IN 7-DAY MAIN REFINANCING TENDER AT FIXED 0.75%

(HU) Hungary Debt Agency (AKK) sells HUF60B vs. HUF45B indicated in 3-Month Bills; Avg Yield 6.44% v 6.63% prior; Bid-to-cover: 2.36x v 1.60x prior

(UK) DMO SELLS £3.5B IN 1.75% SEPT 2022 GILTS; AVG YIELD 1.765% V 1.825% PRIOR; BID-TO-COVER: 1.87X V 1.82X PRIOR; TAIL 0.1BPS V 0.2BPS PRIOR

(ZA) South Africa sells total ZAR2.1B vs. ZAR2.1B indicated in 2023, 2041 and 2048 bonds

Notes/Observations
Unemployment in Spain continued to rise in Sept

Spanish bonds outperform, as bailout speculation persists

EUR/USD remains in 1.28-1.30 range ahead of Thursday's ECB meeting

AUD underperforms following RBA rate cut, bond market reaction more subdued.

Equities
Indices: FTSE 100 +0.10% at 5,827, DAX +0.40% at 7,357, CAC-40 +0.10% at 3,426, IBEX-35 +1% at 7,863, FTSE MIB +0.90% at 15,672, SMI +0.20% at 6,624, S&P 500 Futures +0.50% at 1,444.50

European equity indices opened the session lower, following the gains seen on Monday's session. Markets have since pared losses, amid the decline in Spanish bond yields. The best performing index on today's session has been Spain's IBEX-35, followed by the Italian FTSE MIB. European banks are trading mixed, as UK and French financials have underperformed, while German banks are outperforming. Resource related firms are trading mostly higher, tracking the gains in oil and copper prices.

UK-listed bathroom materials firm Woseley [WOS.UK] has moved between gains and losses after disclosing its FY results and special dividend payment. Alstom [ALO.FR] is lower by over 6%, as the company announced a plan to raise €350M in capital. Food distributor Bonduelle [BON.FR] is higher by approx. 1.5%, after releasing its FY results. In Germany, Brenntag [BNR.DE] is lower by over 2% on a share placement.

Audio/video products firm Loewe AG [LOE.DE] has declined by over 7%, as the company guided its Q3 sales lower y/y. German insurer Talanx [TLX.DE] has moved between gains and losses on its first day of trading. Danish shipping firm Torm [TORM.DK] has risen by over 25%, as the company reached a restructuring agreement with its bankers. Shares Austria's Erste Bank [EBS.AT] are lower by over 1.5% on a share placement.

FTSE 100 movers (RBS -2.9%, Lloyds -2.7%, ARM Holdings -1.8%, Standard Chartered -1.5%, Schroders -1.5%; Babcock International +3.3%, Randgold +2.5%, Wolseley +2%, United Utilities +1.6%, IAG +1.6%)

DAX movers (Commerzbank +1.7%, Deutsche Bank +1.1%, E.ON +1%, K+S +1%, RWE +0.90%; Bayer -1.1%)

IBEX-35 movers (Mediaset +2.2%, ACS +2.1%, Amadeus +2%, Fomento +1.7%, Endesa +1.7%; Banco Popular -1.2%, Bankia -1.1%)

FTSE MIB movers (A2A +3.9%, Finmeccanica +3.3%, Mediolanum +1.6%, Lottomatica +1.6%, Exor +1.4%)

CAC-40 movers (France Telecom +1.6%, Veolia Environmental +1.4%, Unibail +1.4%, EDF +1.3%, Carrefour +0.90%; Alstom -5.5%, Solvay -1.3%, ArcelorMittal -1.3%, St. Gobain -1.1%, Alcatel-Lucent -1.1%)

SMI movers (Swiss Re +1.6%)