Plenty Of Questions Remain Regarding SpainEconomic Data
(EU) ECB: €1.9B borrowed in overnight loan facility vs. €1.5B prior; €788.2B parked in deposit facility vs. €756.6B prior
(JP) Japan May Consumer Confidence: 40.7 v 39.8e
(JP) Japan May Preliminary Machine Tool Orders Y/Y: -2.9% v v 0.4% prior
(FR) France Apr Industrial Production M/M: +1.5% v -0.1%e; Y/Y: +0.9% v -0.3%e
(FR) France Apr Manufacturing Production M/M: -0.7% v -0.7%e; Y/Y: -1.4% v -0.9%e
(CZ) Czech May CPI M/M: 0.2% v 0.1%e; Y/Y: 3.2% v 3.1%e
(DK) Denmark Apr Current Account (DKK): 9.4B v 5.5Be; Trade Balance (ex-shipping): 6.1B v 6.3Be prior
(DK) Denmark May CPI M/M: 0.0% v 0.0%e; Y/Y: 2.1% v 2.1%e
(DK) Denmark May CPI EU Harmonized M/M: 0.0% v 0.0%e; Y/Y: 2.0% v 2.0%e
(ES) Spain Apr House transactions Y/Y: -9.9% v -22.7% prior
(TR) Turkey Apr Current Account: -$5.0B v -$5.0Be
(IT) Italy Q1 Final GDP Q/Q: -0.8% v -0.8%e; Y/Y: -1.4% v -1.3%e
(CN) China May M2 Money Supply M/M: 13.2% v 12.8%e; M1 Money Supply M/M: 3.5% v 3.2%e; M0 Money Supply M/M: 10.0% v 10.6%e
(CN) China May New Yuan Loan (CNY): 793.2B v 700.0Be
(NO) Norway May CPI M/M: 0.0% v 0.1% prior; Y/Y: 0.5% v 0.3% prior
(NO) Norway May CPI Underlying M/M: 0.4% v 0.1% prior; Y/Y: 1.4% v 0.7% prior
(NO) Norway May Producer Prices incl.Oil M/M: -2.1%v -1.6% prior; Y/Y: 2.5% v 2.5% prior
Fixed Income:
(PH) Philippines rejected all bids in 3-month, 6-month and 12-month Bills
(SK) Slovakia Debt Agency (ARDAL) sold €138.0M in 4.35% 2025 Bonds; Avg Yeild 4.2583%; Bid-to-cover: 1.39x
(NO) Norway sold NOK3.0B vs. NOK3.0B indicated in 2% 2023 Bonds; Yield 2.16%
(DE) Germany sold €3.53B in 6-Month BuBills; Avg Yield 0.0070% v 0.0371% prior; Bid-to-cover: 1.2x v 1.5x prior
Notes/Observations
Risk on sentiment prevails following €100B Spanish banking sector aid agreement; initial impact was waning ahead of the NY morning.
Components of China Trade Balance (exports/imports) show improvement.
China new yuan loans shows RRR cuts are working.
Spain 10-year government bond unable to sustain sub-6.0% yield in session.
S&P: India may be first of BRICS nation to lose investment grade rating.
Equities
Indices: IBEX-35 +3.8% at 6799, FTSE 100 +1.3% at 5505, DAX +2.2% at 6265, CAC-40 +1.9% at 3116, FTSE MIB +1.9% at 13,688, SMI +1.3% at 5943, S&P 500 Futures +0.90% at 1340
Equity indices opened the session sharply higher amid Spain's decision to seek aid for its banks and better than expected May exports data out of China. The gains for the session have been largely driven by banks in Spain, as some of the country's large financial institutions opened the session higher by over 9%. Spain IBEX-35 is continuing to outperform, as the index opened higher by over 5%. Resource related companies are broadly higher (Xstrata, Rio Tinto and BP are trading higher by approx. 2%) on higher commodity prices. Amid the rebound in the European equity markets and announcement related to Spain, corporate bond market activity has picked-up on the session. Companies speculated to issue bonds in the near-term include Accor [AC.FR], France Telecom [FTE.FR], GE Capital, Swedbank [SWEDA.SE] and Volkswagen [VOW3.DE].
Shares of Tesco [TSCO.UK] are trading off of the best levels for the session, following the release of the firm's Q1 sales figures. Tesco also reaffirmed its FY targets, as it noted that consumer confidence levels in the UK have been largely stable. Engineering and construction services firm Severfield-Rowen [SFR.UK] has lost over 10% after issuing a profit warning, while Mouchel [MCHL.UK] is lower by over 25%, as the firm disclosed that strategic options being considered might result in only limited value for existing shareholders.
In France, Technicolor [TCH.FR] has gained over 4%, after rejecting a €1.90/share offer from JP Morgan. Porsche [PAH3.DE] is trading higher by ~4%, as a German press report said the company might be able to avoid paying €1.5B in taxes, as part of its merger with Volkswagen. Amid the story related to Porsche, shares of Volkswagen have risen by ~3.5%. Additionally, a separate press report said that Volkswagen is said to be planning to raise its Chinese production by approx. 100% in the next few years.