Economic Data
(FI) Finland July GDP Indicator: 0.3% v 0.5% prior
(FR) France Aug Central Govt. Balance: -€97.7B v -€85.5B prior
(FR) France Aug Trade Balance: -€5.3B v -€5.0Be
(ES) Spain Aug House transactions Y/Y: +3.0% v -2.5% prior
(CZ) Czech Sept CPI M/M: -0.1% v -0.1%e; Y/Y: 3.4% v 3.4%e
(DK) Denmark Aug Current Account (DKK): 14.3B v 13.0Be; Trade Balance Ex-Shipping: 9.0B v 8.5Be
(HU) Hungary Aug Preliminary Trade Balance: €575.1M v €519.5Be
(TR) Turkey Aug Industrial Production WDA M/M: -2.3% v 1.3% prior; Y/Y: 1.2 v 3.3% prior; Industrial Production NSA Y/Y: -1.6% v +2.6%e
(NL) Netherlands Aug Industrial Production M/M: -0.1 v +1.2% prior; Y/Y: -0.6% v -0.3% prior; Industrial Sales Y/Y: +1.3 v -3.1% prior
(UK) Aug Industrial Production M/M: -0.5% v -0.5%e; Y/Y: -1.2% v -1.1%e
(UK) Aug Manufacturing Production M/M: -1.1% v -0.7%e; Y/Y: -1.2% v -0.7%e
(UK) Aug Visible Trade Balance: -£9.8B v -£8.5Be; Total Trade Balance: -£4.2B v -£2.4Be; Trade Balance Non EU: -£5.0B v -£4.0Be
(IT) Italy Q2 Deficit to GDP Ratio: 5.0% v 7.3% prior
(GR) Greece Sept Consumer Price Index Y/Y: 0.9% v 1.7% prior; CPI EU Harmonized Y/Y: 0.3% v 1.2% prior
(RU) Russia Aug Trade Balance: $12.6B v $13.7Be; Exports: $42.1B v $42.9Be; Imports: $29.6B v $29.6Be
Fixed Income
(NL) Netherlands Debt Agency (DSTA) sold €2.26B vs. €1.52.5B indicated range in 1.25% Jan 2018 DSL bonds; Avg Yield 0.861% v 1.305% prior
(DK) Denmark sold total DKK5.35B in 2016 and 2023 Bonds
(GR) Greece Debt Agency (PDMA) sold €1.3B vs. €1.0B indicated 26-week bills ; Avg Yield 4.46% v 4.54% prior; Bid-to-cover: 1.60x v 1.95x prior
(CH) Switzerland sold CHF817.9M in 6-Month Bills; Yield -0.158%
(EU) ECB allotted €89.8B vs. €107Be in 7-Day Main Refinancing Tender at fixed 0.75%
(EU) ECB allotted €12.6B vs €14.0Be in 1-Month Tender at fixed 0.75%
(ZA) South Africa sold total ZAR2.1B v ZAR2.1B indicated in 2021,2023 and 2031 bonds
(HU) Hungary Debt Agency (AKK) sold HUF60B vs. HUF45B indicated 3-Month Bills; Avg Yield 6.40% v 6.44% prior; Bid-to-cover: 2.32x v 2.36x prior
(UK) DMO sold £1.75B in 4.25% 2032 conventional Gilts; Avg Yield 2.661% v 3.015% prior; Bid-to-cover: 2.12x v 1.39x prior; Tail 0.3bps v 0.9bps prior
Notes/Observations
Spanish 10-year gov't yield higher in session and above the 6.0% level in (Note: There was a change in the maturity used in the generic benchmark 10 year overnight and are not comparable to quotes from yesterday)
IMF cuts 2012 and 2013 global GDP forecasts (as speculated)
Moody's cut Cyprus sovereign rating 3 notches to B3 from BA3 with Negative Outlook
EU/IMF/ECB Troika said to adjust adverse scenario forecasts for Greece debt levels to 150%/GDP by 2020 vs prior forecast of 146%/GDP in March
PBoC Gov Zhou said the impact of the global financial crisis is worsening; to take more preemptive and targeted measures in monetary policy; Shanghai Composite up 2% on renewed RRR cuts
UK production data and Trade Balances come in worse than market expectations
Equities
Indices: FTSE 100 -0.20% at 5,827, DAX -0.50% at 7,256, CAC-40 -0.10% at 3,403, IBEX-35 -1% at 7,811, FTSE MIB -0.10% at 15,550, SMI +0.10% at 6,658
Following Monday's losses, European markets opened the session slightly higher. However, markets have since pared gains, led by weakness in the Spanish IBEX-35. Banks are trading mixed, with the downside being led by Spanish financials. On yesterday's session traders were focusing on factors including upcoming corporate earnings, challenges faced by the ESM following its launch and the strength in the US dollar (following the recently released payrolls data).
Despite the weakness in equity markets, euro zone companies have continued to come to the bond market. In terms of medium-term issuance, Fonciere des Regions [FDR.FR] is marketing 2018 EUR-denominated bonds (initial pricing guidance 300-310bps/swaps); Gas Natural [GAS.ES] is planning to sell 4.5 year EUR-denominated bonds (initial pricing guidance 345bps/swaps); Nestle [NESN.CH] is planning to sell US dollar-denominated 2018 bonds (initial pricing guidance 50bps/swaps). In terms of longer-term issuance, Allianz [ALV.DE] is marketing 30-yr EUR-denominated bonds (initial pricing guidance 413bps/swaps).
In other corporate bond market news, Italy's Banco Popolare [BP.IT] was forced to cancel a planned 2016 EUR-denominated bond sale due to lack of investor demand.
With regard to event risks for later today, traders are expected to focus on the eurozone finance ministers meeting and earnings out of US aluminum firm Alcoa.
Shares of Vedanta Resources [VED.UK] have risen by over 0.50%, following the release of the firm's Q2 production update. Staffing firm Hays [HAS.UK] has moved higher by more than 4%, as the company issued its Q1 trading update. In the Spanish banking sector, Bankia [BKIA.ES] has continued its underperformance as the company is approaching the €1/share level. The decline in Bankia come as it remains unclear if the ESM will treat Spain's bank bailout and the issue of legacy assets continues to be debated by euro zone finance ministers.
Prior reports have noted that Bankia had requested €19B in state aid. Norwegian salmon firm Marine Harvest [MHG.NO] has declined by over 1%, after releasing its Q3 production update. Swiss flavor and fragrance firm Givaudan [GIVN.CH] has moved slightly higher, following the release of its Q3 sales report. Germany automakers have outperformed the overall DAX index, as Volkswagen and BMW have issued their Sept sales reports.
FTSE 100 movers (InterContinental Hotels -7.5%, Capita -2.9%, Aggreko -2.4%, BT Group -1.4%, Serco Group -1.3%; Rio Tinto +1.5%, Schroders +1.4%, Vedanta +1.3%, Marks & Spencer +1.1%)
CAC-40 movers (Alcatel -2.8%, Veolia -1.6%, Legrand -1.3%; STMicroelectronics +3.3%, Vinci +1.6%)
DAX movers (BASF -1.1%, Siemens -0.90%; Volkswagen +1%)
IBEX-35 movers (Bankia -6%, Sacyr -4%, Banco Popular -4%, Gamesa 3.7%, Acciona -2.6%)
FTSE MIB (Finmecannica -2%, Telecom Italia -1.8%, Banco Popolare -1.5%, Impreglio -1%, Prysmian -1%)
SMI movers (Holcim -0.90%, Givaudan +0.90%)