EUR trades with firm gains as both the JPY and CHF decline, with Bunds falling in response to successful issuance from Spain and France.
Bank of America beat street expectations with Q4 EPS ex-some items USD 0.29 vs. Exp. 0.20.
US participants look forward to weekly jobs data, Housing Starts, Building Permits, Philadelphia Fed Manufacturing and earnings from Citigroup.
RANsquawk European Morning Briefing Video: http://youtu.be/UVk8tthd74g
Heading into the North American open, stocks in Europe are seen trading higher, underpinned by well received debt auctions from France and Spain this morning. Around 52k Mar-Bund contracts were easily absorbed by the market, which in turn supported peripheral bonds. IT/GE and PO/GE 10s tighter by c.9bps and SP/GE 10s tighter by 2bps after selling EUR 4.5bln worth of bonds. Of note, the EONIA curve steepened aggressively this morning in reaction to press reports that the ECB is said to weigh tougher loan collateral rules, citing sources. Also, the key 3m Euribor rate fixed higher than prev and exp which consequently weighed on the strip. Looking at other asset classes, USD/JPY trended higher throughout the session, as market participants reacted to comments from Japanese Economy Minister Amari, who said the JPY is still in the process of correcting from excessive strength and hopes the BoJ will understand PM Abe's strong hopes it will adopt a 2% inflation target. He also added that he regrets that his JPY remark on Tuesday was misinterpreted. EUR/CHF implieds rose sharply this morning and the cross is seen higher by 67pips. Of note, the SNB said that it expects 2012 profit of CHF 6bln, consolidated profit will be higher because of contribution from stabilisation fund. Finally, pre-equity cash open it was announced that Rio Tinto CEO Tom Albanese is to step down and that the company is to take impairment charge of about USD 14bln. Going forward, market participants will get to digest the release of the latest weekly jobs data, housing starts and building permits, as well as the Philadelphia Fed survey for the month of January.
The Nikkei 225 closed the session in minor positive territory, rallying into the close as further JPY weakness was observed following comments from Japanese economy minister Amari. Amari said the JPY is still in the process of correcting from excessive strength and hopes the BoJ will understand PM Abe's strong hopes it will adopt a 2% inflation target.
For China, Societe Generale raised their 2013 GDP growth forecast to 7.9%.
EU & UK Headlines
Earlier today Greek finance minister Stournaras ruled out another debt buyback and said there has been no discussion on official sector haircut. This comes following yesterday's comments where Stournaras was quoted saying a further debt restructuring will become possible in case of a primary surplus although this was not expected until the end of 2013.
In terms of data releases, there has been a lack of tier-1 data from the Eurozone and UK today with focus on bond issuance from France and in particular Spain. The Spanish issuance was well received with the treasury selling EUR 4.5bln vs. max target of EUR 4.5bln and the yield printing lower than previous issuance on all 3 lines.
The Spanish Treasury chief said that Spain doesn't need a bailout now; market sentiment has improved. The Treasury chief added that Spain will deliver on its deficit targets.
There has been a lack of market-moving stories from the US since yesterday's close although there are number of key-risk events for the US this afternoon with weekly jobs data, housing starts, building permits and Philadelphia Fed manufacturing all to be released later on today.
European equities are mixed today with the DAX underperforming against its European counterparts, trading down around 0.1% whereas FTSE, CAC and Eurostoxx are all trading with minor gains. SAP (-1.14%) shares are the worst performing in the DAX after they were cut to neutral from buy at Citigroup with the company weighing on the index.
In the UK, Rio Tinto shares opened the session down almost 4% after the company announced their CEO Albanese was stepped down following the Co. announcing they are to recognise a non-cash impairment of about USD 14bln. However they have retraced some of the losses and currently trade down just over 1% following Citigroup raising the company to Buy.
In the US, Bank of America reported their Q4 earnings this morning with Q4 EPS excluding some items at USD 0.29 vs. Exp. USD 0.20. In immediate reaction Co. shares were seen trading 1.6% higher in pre-market trade with the CEO Moynihan saying we enter 2013 strong and well positioned for further growth.
USD/JPY trended higher throughout the session, as market participants reacted to comments from Japanese Economy Minister Amari, who said the JPY is still in the process of correcting from excessive strength and hopes the BoJ will understand PM Abe's strong hopes it will adopt a 2% inflation target. He also added that he regrets that his JPY remark on Tuesday was misinterpreted. The 1-month implieds rose to highest level since September 2011, underpinned by barriers at 90.00 level.
The EONIA curve steepened aggressively this morning in reaction to press reports that the ECB is said to weigh tougher loan collateral rules, citing sources. Also, the key 3m Euribor rate fixed higher than prev and exp which consequently weighed on the strip. Re-pricing of interest rate expectations, together well received debt auctions from Spain and France, as well as touted demand from macro names saw EUR/USD edge higher throughout the session.
EUR/CHF 1-month implieds rose sharply this morning, highest level since December 2011 and heading through the North American cross over, EUR/CHF is seen higher by around by 67pips. To the upside, barriers said to be placed at 1.2500 level. Of note, the SNB said that it expects 2012 profit of CHF 6bln, consolidated profit will be higher because of contribution from stabilisation fund.
WTI crude futures are trading with minor positive gains as the USD-index trades down approximately 0.3%, lifting the energy complex. Supply issues could also be gaining traction after ExxonMobil earlier reported a leak or spill at its 238,000 BPD Joliet refinery in Channahon, Illinois.
In the precious metals market, the Austrian central bank today confirmed their gold storage plans saying they have 17% of gold reserves in Austria and 80% in the UK with 3% of their gold reserves in Switzerland. This follows the Bundesbank yesterday repatriating their gold reserves from France and New York.
Print 12:57, 17 Jan 2013 - Market Analysis - Source: RANsquawk
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