Spain has decent bill auction results; focus turns to Fed's Benanke testimonyEconomic Data
(EU) Jun EU27 New Car Registrations: -2.8% v -8.7% prior
(IS) Israel July Inflation Forecast: 1.9% v 2.0% prior
(IS) Israel Jun Money Supply Y/Y: 2.0% v 3.0% prior
(UK) May ONS House Price Y/Y: 2.3% v 1.4% prior
(UK) Jun CPI M/M: -0.4% v -0.1%e; Y/Y: 2.4% v 2.8%e; CPI Core Y/Y: 2.1% v 2.5%e
(UK) Jun RPI M/M: -0.2% v 0.0%e; Y/Y: 2.8% v 3.0%e; RPI Ex-Mortgages Y/Y: 2.8% v 3.1%e; Retail Price Index: 241.8 v 242.3e
(DE) Germany July Zew Economic Sentiment: -19.6 v -20.0e; Current Situation: 21.1 v 30.0e
(EU) Eurozone July ZEW Economic Sentiment: -22.3 v -20.1 prior
Fixed Income
(ES) Spain Debt Agency (Tesoro) sold total €3.561B vs. €2.5-3.5B indicated range in 12-Month and 18-Month Bills
Sold €2.60B in 12-month Bills; Avg Yield 3.918% v 5.074% prior; Bid-to-cover: 2.23x v 2.16x prior; Max Yield 3.990% v 5.200% prior; Tail: bps 7.2 v 12.6bps prior
Sold €0.96B in 18-month Bills; Avg Yield 4.242% v 5.107% prior; Bid-to-cover: 3.66x v 4.42x prior; Max Yield 4.350% v 5.350% prior; Tail: bps 10.8 v 24.3bps prior
(CH) Switzerland sold CHF475.6M in 3-Month Bills; Yield -0.699%
(ZA) South Africa sold total ZAR2.1B vs. ZAR2.1B indicated in 2023, 2036 and 2048 Bonds
(EU) ECB allotted €156.8B in 7-day refi operation vs. €160Be at fixed 0.75%
(GR) Greece Debt Agency (PDMA) sold €1.625B vs. €1.25B indicated in 13-week Bills; Avg Yield 4.28% v 4.31% prior; Bid-to-cover:2.12x v 2.19x prior
(HU) Hungary Debt Agency (AKK) sold HUF60B vs. HUF45B indicated in 3-Month Bills; Avg Yield 6.89% v 7.11% prior; Bid-to-cover: 2.95x v 2.12x prior
(BE) Belgium sold total €3.0B vs. €3.0B indicated in 3-month and 12-month Bills
Sold €1.525B in 3-month Bills; Avg yield -0.016% (record low) v +0.211% prior; Bid-to-cover: 3.17x v 3.72x prior
Sold €1.475B in 12-month Bills; Avg yield 0.040% v 0.561% prior; Bid-to-cover: 1.99x v 2.28x prior
Notes/Observations
Fed Chairman Bernanke may signal Fed QE in his semiannual testimony.
Speculation that the Fed might cut interest rates on excess reserves (IOER).
Japan Finance Minister reiterates verbal intervention on JPY currency rise.
UK inflation falls sharply in June to 2-year lows.
Spain bill auction results see yields decline.
German ZEW registers its third MoM decline.
Equities
FTSE 100 -0.20% at 5652, DAX +0.40% at 6594, CAC-40 +0.50% at 3195, IBEX-35 +1.3% at 6615, FTSE MIB +0.50% at 13,738, SMI +0.40% at 6221, S&P 500 Futures +0.40% at 1353
European equity indices opened the session broadly higher, led by Spain's IBEX-35, as markets await the commentary from US Fed Chief Bernanke. Equity indices have moved higher, despite the declines being seen in the eurozone core and semi-core government bond yields. As of the time of writing, European equity indices have pared gains amid mixed ZEW data out of Germany and bill auction results out of Spain. In the banking sector, trading has been mixed (laggards include RBS and German banks). Additionally, Italian financials have been little impacted by the Moody's downgrade of 13 Italian banks. European resource related shares are mostly higher, tracking the gains in commodity prices. However, shares of Rio Tinto have moved lower, following the release of the company's Q2 production report. Looking ahead, US companies due to report earnings later today include Goldman Sachs (GS), Coca-Cola (KO) and Johnson & Johnson (JNJ).
Shares of Alcatel-Lucent [ALU.FR] have lost over 10% after the company guided its Q2 results below analyst expectations. Also the company warned on its FY margin targets, amid a slower than expected business mix improvement. Peugeot [UG.FR[ is lower by more than 2% as its June new car registrations declined by over 8%. In London, CSR [CSR.UK] has gained over 30%, as the company announced that it would sell its mobile technology unit to Samsung for $310M in cash. Additionally, Samsung plans to acquire an equity stake in CSR. Lamprell [LAM.UK] is higher by more than 3%, following the announcement that the company received a ~$121M contract.
In other UK movers, Woseley [WOS.UK] is lower by ~3% (plans to explore options for businesses in France), while Hochschild Mining [HOC.UK] is movingly slightly lower after issuing its quarterly production update. In Switzerland [SGSN.CH] has gained over 1% after issuing H1 results. German automakers have outperformed the overall DAX index, as EU June new car registration declined at a slower rate than what was seen in May. Commerzbank has traded lower, amid press speculation that the company is mulling over 1,000 job cuts.