Spain Bill Auction Results Viewed As Decent Despite Higher YieldsEconomic Data
(EU) ECB: €4.4B borrowed in overnight loan facility vs. €3.0B prior; €763.6B parked in deposit facility vs. €741.2B prior
(FR) France Jun Business Confidence Indicator: 92 v 92e; Production Outlook Indicator: -30 v -28 prior; Own-Company Production Outlook: -4 v -4 prior
(HU) Hungary Apr Avg Gross Wages Y/Y: % v 4.0%e
(ES) Spain Apr Service Sector Employment Y/Y: -2.9% v -2.3% prior
(ES) Spain Apr Industrial Orders Y/Y: -4.5% v -6.5% prior
(SE) Sweden May Unemployment Rate: 8.1% v 7.8%e
(IS) Israel Jun Inflation Forecast: 2.0% v 2.4% prior
(IS) Israel May Money Supply Y/Y: 3.0% v 4.5% prior
(UK) May CPI M/M: -0.1% v 0.1%e; Y/Y: 2.8% v 3.0%e; CPI Core Y/Y: 2.2% v 2.3%e
(UK) May RPI M/M: 0.0% v 0.2%e; Y/Y: 3.1% v 3.3%e; RPI-Ex Mortgage Payments Y/Y: 3.1% v 3.3%e; Retail Price Index: 242.4 v 243.0e
(UK) Apr ONS House Price Y/Y: +1.4% v -0.4% prior
(DE) Germany Jun ZEW Economic Sentiment: -16.9 v +2.3e; Current Situation: 33.2 v 39.0e
(EU) Eurozone Jun ZEW Economic Sentiment: -20.1 v -2.4 prior
(EU) Eurozone Apr Construction Output M/M: -2.7 v 11.4% prior; Y/Y: -5.0% v -2.6% prior
(ZA) South Africa Q1 Nonfarm Payrolls Q/Q: 0.1% v 0.3% prior; Y/Y: 1.1% v 1.6% prior
(PO) Portugal May Producer Prices M/M: -0.5% v +0.6% prior; Y/Y: 3.2% v 3.6% prior
Fixed Income
(DK) Denmark sold total DKK4.625B in 2014 and 2021 in Bonds
Sold DKK1.550B in 2% 2014 Bonds; avg yields -0.08% v 0.31% prior
Sold DKK3.075B in 3% 2021 Bonds; avg yields 1.22% v 1.04% prior
(ES) Spain Debt Agency (Tesoro) sold total €3.04Bvs. €2.0-3.0B indicated range in 12-Month and 18-Month Bills
Sold €2.4B in 12-month Bills; Avg Yield 5.074% v 2.985% prior; Bid-to-cover: 2.16x v 1.84x prior; Max Yield 5.200% v 3.099% prior
Sold €639M in 18-month Bills; Avg Yield 5.107% v 3.302% prior; Bid-to-cover: 4.42x v 3.23x prior; Max Yield 5.350% v 3.404% prior
(GR) Greece Debt Agency (PDMA) sold €1.3B vs. €1.0B indiacted in 13-week Treasury Bills; Avg Yield 4.31% v 4.34% prior; Bid-to-cover: 2.19x v 2.32x prior
(ZA) South Africa sold total ZAR2.1B vs.ZAR2.1B indicated in 2017, 2021 and 2023 bonds
(EU) ECB allotted €167.3B in 7-Day Main Refinancing Tender vs. €125Be
(HU) Hungary Debt Agency (AKK) sold total HUF50B vs. HUF45B indicated in 3-Month Bills; Avg Yield 7.14% v 7.17% prior; Bid-to-cover: 1.89x v 2.06x prior
Notes/Observations
BRICS and Emerging markets announced IMF pledges for IMF global firewall; IMF now has $456B in funding pledges from 37 countries.
RBA minutes: Rates need to be a little more supportive; Inflation expected at the lower end of 2-3% range over the next year.
Denmark sells 2-year Notes at a negative yield for the first time ever.
Germany Constitutional Court ruling on ESM and Fiscal Pact: Lawmakers win bid over gov't information on ESM; ruling does NOT prevent ESM from taking effect.
EU aide: Maintains July 9th target for ESM startup.
Bank of Spain (BOS): Confirmed delay of full bank audit reports until September.
UK inflation comes in lower than expected.
German ZEW registers strongest decline since Oct 1998.
UK inflation continues to move lower.
Spain sells indiacted amount in Bills at sharply higher rates and solid bid-cover ratios.
Second day of G20 Summit in Mexico.
Equities
Indices: FTSE 100 +0.80% at 5534, DAX +0.40% at 6272. CAC-40 flat at 3067, IBEX-35 +1.3% at 6602, FTSE MIB +0.70% at 13,100, SMI +0.50% at 5966, S&P 500 Futures 1342, +0.10%
European equity indices opened the session broadly higher, despite mixed trading in the banking sector and disappointing German ZEW data, as markets have rebounded from the losses seen in the prior session. The IBEX-35 has outperformed, as Spain's 10-yr bond yield has moved off of the record highs (above 7.25%), as the country's government auctioned short-term bills. Dealers appear to be move focused on Thursday's auction in which Spain is expected to sell 2014, 2015 and 2017 bonds. Additionally, there continues to be hopes that global central banks could announce additional easing measures, amid Wed's US Fed decision. The German ZEW Economists noted that in their most recent survey, more participants expect the ECB to cut rates than before, but a majority still sees rates being left unchanged. In terms of upcoming equity market events, US shipping name Fedex is due to report its quarterly results and outlook later during the US morning.
French name Danone [BN.FR] has declined by more than 6%, after cutting its forecast for FY12 operating margins. French banks are trading mixed, amid cautious commentary out of Morgan Stanley. Additionally, a French press report said that the government is considering a 3% tax on dividends, which could be implemented during the summer.
Shares of Home Retail [HOME.UK] have moved higher by over 14%, as the company reported better than expected Q1 results. In other UK movers, Whitbread [WTB.UK] is higher by approx. 7% (issued Q1 sales figures), Chemring [CHG.UK] has lost over 6% (reported H1 sales) and Weir Group has gained over 5% (reaffirmed FY guidance and issued long-term targets). In Italy, Banca Monte Paschi [BMPS.IT] is lower by over 3%, underperforming other Italian, as the company is said to have reached an agreement with certain creditor banks. Additionally, following yesterday's close, S&P placed the company's BBB rating on watch negative.
Telecom Italia [TIT.IT] has risen by over 4% on press speculation that the firm could seek to spin off its fixed line unit. Spanish banks are mixed as the Bank of Spain confirmed that it asked for the full audit of the country's banks to be delayed, as there is a need to gather additional information. The purpose of the audit is for Spain to determine how much of the €100B in funds will be needed for its banks. In Germany Fraport [FRA.DE] is higher by over 1% (broker upgrade), while SAP [SAP.DE] has gained over 1%, after competitor Oracle preannounced its quarterly results.