Euro Hits New Lows As European Leaders Openly Talk About A Potential Greek EMU Exit
Economic Data(DE) Germany Apr Wholesale Price Index M/M: 0.5% v 0.9% prior; Y/Y: 2.4% v 2.2% prior
(FI) Finland Apr CPI M/M: 0.3% v 0.3%e; Y/Y: 3.1% v 3.0%e
(FI) Finland Mar Final Retail Sales Volume Y/Y: 5.3% v 5.7% prior
(IN) India Apr Monthly Wholesale Prices Y/Y: 7.2% v 6.7%e
(FR) France Mar Current Account: -€4.1B v -€5.3B prior
(CH) Swiss Apr Producer & Import Prices M/M: 0.2%e v 0.3% prior; Y/Y: -2.1%e v -2.0% prior
(NL) Netherlands Mar Retail Sales Y/Y: 2.2% v 1.1% prior
(SE) Sweden Q1 Industry Capacity: 88.4% v 87.7% prior
(ES) Spain ECB net April bank borrowings at €263.5B v €227.6B prior; Gross borrowing steady in April at €316.9B vs. €316.3B
(IT) Italy Apr Final CPI (NIC incl. tobacco) M/M: 0.5% v 0.5%e; Y/Y: 3.3% v 3.3%e
(IT) Italy Apr Final CPI EU Harmonized M/M: 0.9% v 0.9%e; Y/Y: 3.7% v 3.8%e
(IT) Italy Mar General Government Debt: €1.946 v €1.928T prior
(EU) Euro Zone Mar Industrial Production M/M: -0.3% v +0.4%e; Y/Y: -2.2% v -1.3%e
Fixed Income:
(ES) Spain Debt Agency (Tesoro) sold €2.9B v €2.0-3.0B in 12-Month and 18-Month Bills
Sold €2.19 in 12-month Bills; Avg Yield 2.985% v 2.623% prior; Bid-to-cover: 1.84x v 2.90x prior; Max Yield 3.099% v 2.738% prior
Sold €711M in 18-month Bills; Avg Yield 3.302% v 3.110% prior; Bid-to-cover: 3.23x v 3.77x prior; Max Yield 3.404% v 3.200% prior
(SL) Slovakia Debt Agency (ARDAL) sold €321.7M in 2017 Bonds; avg yield 2.6356%; bid-to-cover: 1.59x
(NO) Norway sold NOK3.0B vs. NOK3.0B indicated in 10-month Bills; Yield 1.66%
(IT) Italy Debt Agency (Tesoro) sold total €5.25B vs. €3.5-5.25B indicated in 2015, 2020, 2022 and 2025 BTP Bonds
Sold €3.5B in 2.5% Mar 2015 BTP; Avg Yield 3.91% (highest since mid-Jan) v 3.89% prior; Bid-to-cover: 1.52x v 1.44x prior
Sold €542M in 4.25% Mar 2020 BTP; Avg Yield 5.33% v 3.99% prior; Bid-to-cover: 2.08x v 1.44x prior (last issued over two years ago)
Sold €651M in 5.0% Mar 2022 BTP; Avg Yield 5.66% v 6.08% prior; Bid-to-cover: 2.27x v 1.42x prior
Sold €557M in 5.0% Mar 2025 BTP; Avg Yield 5.90% v 6.34% prior; Bid-to-cover: 1.93x v 1.63x prior
(DE) Germany sold €3.3Bin 6-Month BuBills ; Avg Yield 0.0371% v 0.0662% prior; Bid-to-cover: 1.5x v 1.4x prior (apr 2nd)
(ID) Indonesia sold total IDR775B vs. IDR6.0T indicated in 10-Year, 15-year and 20-year Govt Bond
(ID) Indonesia rejected all bids in 3 Month and 12-month Treasury Bills
Notes/Observations
Greek coalition talks fizzle. Euro exit fears rise.
China PBoC cuts RRR by 50bps to 20.00% (as largely speculated). Lackluster response in markets.
German Chancellor Merkel party suffers worst electoral defeat since WWII.
European leaders appeared more openly talking about a potential Greek EMU exit.
Equities
Indices: FTSE 100 -1.8% at 5476, DAX -2.1% at 6440, CAC-40 -2.3% at 3056, IBEX-35 -2.9% at 6789, SMI -1.25% at 5880, FTSE MIB -2.9% at 13,636
Equity markets in Europe started the week in negative territory, amid continued concerns about the Greek government, which have driven Greek 10-yr yields higher by over 100bps. Additionally, worries about Spanish banks and regions have pushed Spain's 10-yr yields to highs not seen since before the ECB's Dec 8th LTRO, as recent data from the ECB has shown that Spanish banks are continuing to increase their reliance on the central bank (Spain ECB net April bank borrowings at €263.5B (record) v €227.6B prior). Additionally, the equity markets are weaker as Italy and Spain have both sold debt on today's session.
UK-listed Lonmin [LMI.UK] is trading lower by over 2%, after reporting a y/y decline in its H1 operating profit and revenues. Ivensys [ISYS.UK] has gained over 5% on renewed takeover speculation, while Afren [AFR.UK] has gained over 3%, after disclosing an oil find in Nigeria. In Switzerland, Holcim [HOLN.CH] is lower by over 0.50% as the company announced a cost management program . Amid the broad declines in Spanish banks, BBVA [BBVA.ES] has lost over 4%, after disclosing that Spain's new provisioning rules would negatively impact its net profit by €1.3B.
In France, Vivendi [VIV.FR] is trading lower by approx. 1%, ahead of its earnings report due after today's close. ING [INGA.NL] has lost over 5%, as the EU Commission has launched a new probe into the state aid previously received by the firm. In Germany, shares of copper producer Aurubis [NDA.DE] are trading higher, as the company's Q1 operating profit beat analyst expectations. Celesio [CLS1.DE] and Norma Group are trading lower following the release of their respective quarterly earnings reports. Infineon [IFX.DE] has declined by about 2%, after disclosing that its CEO was planning to resign in Sept due to health reasons.
Electronic device manufacturer Loewe [LOE.DE] is higher by more than 25%, on speculation that the company could be acquired by Apple. Fresenius [FRE.DE], Fraport [FRA.DE] and Balda [BAF.DE]have all been weighed down by ex-dividend factors.