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Germany Faces Resistance To Further ECB Stimulus Measures

Published 09/10/2012, 06:55 AM
Updated 01/01/2017, 02:20 AM
Major: Germany still faces growing resistance to further ECB stimulus measures ahead of High Court ruling on ESM

Economic Data
(JP) Japan August Consumer Confidence: 40.5 v 39.4e

(FI) Finland July Industrial Production M/M: +0.8% v -0.2%e; Y/Y: +1.2% v -1.0%e

(JP) August Eco Watchers Current Survey: 43.6 v 43.4e; Outlook Survey: 43.6 v 44.4e

(FR) Bank of France August Business Sentiment: 93 v 89e

(FR) France July Industrial Production M/M: +0.2% v -0.5%e; Y/Y: -3.1% v -3.7%e

(FR) France July Manufacturing Production M/M: +0.9% v -0.5%e; Y/Y: -2.8% v -4.2%e

(CZ) Czech August CPI M/M: -0.1% v -0.1%e; Y/Y: 3.3% v 3.3%e

(CZ) Czech August Unemployment Rate: 8.3% v 8.3%e

(DK) Denmark July Current Account (DKK): 13.4B v 12Be; Trade Balance (ex-shipping): 8.2B v 7.0Be

(DK) Denmark August CPI M/M: 0.3% v 0.2%e; Y/Y: 2.6% v 2.5%e

(DK) Denmark August CPI EU Harmonized M/M: 0.4% v 0.2%e; Y/Y: 2.6% v 2.4%e

(TR) Turkey Q2 GDP Q/Q: +1.8% v -0.1% prior; Y/Y: 2.9% v 3.1%e; GDP wda Y/Y: 3.2% v 2.5% prior

(TR) Turkey July Industrial Production M/M: +1.7 v -1.6% prior; Y/Y: 3.4% v 1.4%e; Industrial Production NSA Y/Y: No est v 2.7% prior

(SE) Sweden July Industrial Production M/M:+0.3 % v -0.3%e; Y/Y: -0.4% v -2.1%e

(SE) Sweden July Industrial Orders M/M: -0.7 v -0.4% prior; Y/Y: -5.4 v -0.9% prior

(IT) Italy Q2 Final GDP Q/Q: -0.8% v -0.7%e; Y/Y: -2.6% v -2.5%e

(NO) Norway August CPI M/M: -0.4% v -0.1%e; Y/Y: 0.5% v 0.8%e

(NO) Norway August CPI Underlying M/M: -0.7% v -0.4%e, Y/Y: 1.2% v 1.5%e

(NO) Norway August Producer Prices incl.Oil M/M: 2.3% v 0.6%e; Y/Y: +4.4 v -0.6% prior

(EU) Eurozone September Sentix Investor Confidence: -23.2 v -30.5e v -30.3 prior

(GR) Greece July Industrial Production Y/Y: -5.0% v +0.2% prior

(GR) Greece August Consumer Price Index Y/Y: 1.7% v 1.3% prior; EU Harmonized Y/Y: 1.2% v 0.9% prior

(PT) Portugal July Construction Works Index: 57.0 v 55.3 prior

(PT) Portugal July Trade Balance: -€567M v -€508M prior

Fixed Income:
(DE) Germany sold €3.4B in 6-month BuBills; Avg Yield -0.0147% v -0.499% prior; Bid-to-cover: 1.5x v 1.3x prior

Notes/Observations
China trade date shows weakening domestic engine and tepid exports; confirms outlook worsening.

South Korea Finance Minister Bahk unveiled new fiscal stimulus package estimated at approx KRW4.6T for 2012 (~$4.1B).

Investor George Soros: Germany must lead creation of political union or leave single currency.

IMF strongly backs ECB's Draghi bond buying plan. Spain Italy already doing enough.

Expectations for the Fed are around. 60% for more QE at Thursday's FOMC meeting with $200-$300B in new bond purchases eyed and rates near zero into 2015.

Moody's: ECB debt purchases can buy sovereigns some time but saw little new in the bond buying program and a number of uncertainties.

More German legal challenges for ESM and ECB.

Equities
FTSE 100 -0.20% at 5784, DAX flat at 7215, CAC-40 -0.10% at 3515, IBEX-35 -0.10% at 7872, FTSE MIB -0.40% at 16,049, SMI -0.30% at 6515, S&P 500 Futures -0.24% at 1434.75

European equity indices opened the session broadly lower, ahead of key events for later this week, including the FOMC decision (September 13th) and Germany's Constitutional Court ruling on the ESM (September 12th).Today's weakness has been led by the Italian FTSE MIB, amid the underperformance being seen for Italy's 10-year bonds. Trading in the banking sector has been mixed and underperformers include BBVA and SocGen.

Outperformers in the sector include BNP, Commerzbank, Credit Agricole, Deutsche Bank and RBS. Resource related companies are broadly higher, tracking the gains in Chinese equities and copper prices. In terms of the European corporate bond market, various Spanish companies (including Banesto, BBVA and Iberdrola) have announced plans to sell debt on today's session, as spreads have tightened since last week's ECB meeting.

In London, shares of Marks & Spencer [MKS.UK] have risen by over 1% on renewed takeover speculation. BP [BP.UK] is trading flat, amid reports that the firm is expected to sell certain offshore assets in the Gulf of Mexico for around $7B. Xstrata [XTA.UK] is higher by more than 2%, as Glencore [GLEN.UK] confirmed that it would raise its offer for the company to 3.05 shares from 2.8 prior. Shares of JJB Sports [JJB.UK] are lower by more than 5% on reports that Better Capital missed the deadline to submit a bid for the company. Associated British Foods [ABF.UK] is trading lower by ~1.5%, after releasing its trading update.

In France, construction firm Eiffage [FGR.FR] is higher by over 1%, following comments from its CEO. Swiss energy services firm Transocean [RIGN.CH] has outperformed the SMI index, as the company named a new CFO and announced a plan to sell certain rig assets for $1.1B. Banca Monte Paschi [BMPS.IT] has gained over 6%, after the company's shareholder foundation denied press reports that it might sell all of its 36.3% stake in the firm. Shares of Deutsche Bank [DBK.DE] have gained over 1%, ahead of the release of the firm's strategy update, which is due later this week.

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