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European Market Update: March 12, 2013

Published 03/12/2013, 07:52 AM
Updated 01/01/2017, 02:20 AM
Cable hits fresh 2 ½ year lows following disappointing production data; Spanish bill auction results were again solid



USD/JPY pair rose to 3.5 year highs on growing expectations for early BOJ easing actions; yen off worst level after DPJ opposition reiterated opposition to Iwati as Dep Governor.

Japan Consumer Confidence at 5-year high.

F X dealer circulating of CNY band widening to 3% (Note: current band is 1% and last widened back in April 2012)

BoJ Minutes noted that some members suggested buying longer maturity bonds and more risk assets.

BoJ Nominee Iwata: Good to revise BoJ Law and add employment to mandate; inappropriate to set hard target; must proceed with QE to continue current trend of weak yen & stock rally.

BoJ Nominee Kuroda: repeats will do whatever it takes to beat deflation; more easing needed; wants debate on cutting IoER.

Dow Jones rose for the seventh consecutive session to close at a fresh record high.

Hungary lawmakers amend constitution to weaken democracy.

GBP at fresh 2 year lows following weaker Industrial and manufacturing production data.

Italy and Spain tested markets with bill sales today; Spanish results were solid selling just above indicated range with lower yields.

Italy 12-month yields at highest level since Dec 2012 at 1.280%

Economic Data

(JP) Japan Feb Consumer Confidence: 44.3 v 43.0e

(IN) India Jan Industrial Production Y/Y: +2.4% v +1.3%e

(IN) India Feb CPI Y/Y:10.9% v 10.6%

(DE) Germany Feb Final Consumer Price Index M/M: 0.6% v 0.6%e; Y/Y: 1.5% v 1.5%e

(DE) Germany Feb Final CPI EU Harmonized M/M: 0.8% v 0.8%e; Y/Y: 1.8% v 1.8%e

(DE) Germany Feb Wholesale Price Index M/M: 0.1% v 0.3% prior; Y/Y: 1.4% v 2.3% prior

(FR) France Jan Current Account: -€5.0B v -€3.8B prior

(ES) Spain Jan House transactions Y/Y: 18.9% v 2.3% prior

(HU) Hungary Feb Consumer Prices M/M: -0.1% v +0.2%e; Y/Y: 2.8% v 3.1%e

(ZA) South Africa Q4 Current Account Balance (ZAR): -212.6B v -203.1Be; Percentage to GDP: -6.5% v -6.3%e

(TR) Turkey January Current Account: -$5.6B v -$5.3Be

(EU) ECB: €24M borrowed in overnight loan facility vs. €15M prior; €131.6B parked in deposit facility vs. €134.1B prior

(SE) Sweden February CPI Headline Rate M/M: 0.4% v 0.4%e; Y/Y: -0.2% v -0.2%e; CPI Level: 313.39 v 313.14e

(SE) Sweden February CPI Underlying Rate (CPIF) M/M:0.5% v 0.5%e; Y/Y: 0.9% v 0.8%e

(IT) Italy February Final CPI (nic Tobacco) M/M: 0.1% v 0.1% prelim; Y/Y: 1.9% v 1.9% prelim

(IT) Italy February Final CPI EU Harmonized M/M: -0.2% v -0.2% prelim; Y/Y: 2.0% v 2.0% prelim

(UK) January Industrial Production M/M: -1.2% v +0.1%e; Y/Y: -2.9% v -1.1%e

(UK) January Manufacturing Production M/M: -1.5% v 0.0%e; Y/Y: -3.0% v -1.0%e

(UK) January Visible Trade Balance: -£8.2B v -£9.0Be; Total Trade Balance: -£2.4B v -£3.2Be; Trade Balance Non EU: -£3.8B v -£4.5Be

(GR) Greece January Industrial Production Y/Y: -4.8% v -0.5% prior

Fixed Income:

(NL) Netherlands Debt Agency (DSTA) sold €3.48B vs. €2.5-3.5B indicated range in 0% 2016 DSL Bonds; Avg Yield 0.395% v 0.318% prior.

(ZA) South Africa sold total ZAR2.1B vs.ZAR2.1B indicated in 2031, 2036 and 2041 bonds.

(ES) Spain Debt Agency (Tesoso) sold total €5.83B vs. €4.5-5.5B indicated in 6-Month and 12-Month Bills.

Sold €1.98B in 6-month Bills; Avg Yield: 0.794% v 0.859% prior; Bid-to-cover: 3.22x v 2.88x prior; Max Yield: 0.820% v 0.880% prior; Tail: 2.6bps v 2.1bps prior.

Sold €3.85B in 12-month Bills; Avg Yield: 1.363% v 1.548% prior; Bid-to-cover: 1.85x v 1.97x prior; Max Yield 1.400% v 1.580% prior; Tail: 3.7bps v 3.2bps prior.

(IT) Italy Debt Agency (Tesoro) sold €7.75B vs. €7.75B indicated in 12-month Bills; Avg Yield 1.280% (highest since Dec vs. 1.094% prior; Bid-to-cover: 1.50x v 1.38x prior.



Indices: FTSE 100 +0.10% at 6,510, DAX flat at 7,983, CAC-40 -0.10% at 3,834, IBEX-35 +0.50% at 8,592, FTSE MIB +0.60% at 16,189, SMI +0.30% at 7,779, S&P 500 Futures -0.10% at 1,548.

European equity markets are mostly higher, led by gains in the Italian FTSE MIB and Spanish IBEX-35, which have tracked the gains in peripheral bond prices. European banks are mostly higher, led by Commerzbank. Later today, Italy's largest bank Intesa is due to report its FY earnings. Resource related firms are mostly lower, in line with the weakness in copper and oil prices.

UK movers [Antofagasta +3% (special dividend), IG Group +6.5% (Q3 sales above expectations), St. Ives +1.5% (raised dividend) ;SDL -11% (FY profits declined y/y),St. James Place -2.5% (share placement) and British Land -2.5% (share placement)]

Germany movers [Commerzbank +2% (asset sale speculation),TUI AG +1.5% (broker commentary),Fraport -2.5% (FY sales and outlook below ests), Symrise -2.5% (margins declined y/y)]

Switzerland movers [DKSH +2.5% (special dividend); Gurit -5% (FY profits declined y/y)]

The Netherlands movers [SBM Offshore +16% (settlement agreement)]

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