Focus remains on today's Eurogroup meeting on Greece, with the European markets quiet as they await any decisions and a lack of tier-1 macroeconomic data
US Democratic Senator says little progress has been made on US fiscal cliff
RANsquawk European Morning Briefing Video: http://youtu.be/cum0T_9y0n8
European equities opened lower this morning and have continued to see losses heading into the second half of the session. The Eurogroup meeting continues to be the key focus with ministers meeting for the third time in two weeks to discuss the release of the next tranche of Greek aid. Overnight, a senior democratic senator said that US lawmakers have made little progress on the fiscal cliff in the last ten days which has also weighed on sentiment.
Italian consumer confidence missed expectations at 84.8 vs. Exp. 86.3 which was a record low. In the immediate reaction Dec-Bund moved higher and EUR/USD fell below the 1.2950 handle. The spread between the Italian 10-year and its German counterpart has widened ahead of Italian supply later on this week and the data release.
In Spain, the Catalonian election saw the pro-independence separatist party win 87 out of 135 seats in Catalonian parliament, putting pressure on Spanish PM Rajoy. Despite winning the election, the party failed to get a resounding mandate for a referendum on independence.
Looking ahead, the session remains light on tier-1 macroeconomic data releases however any news coming out of the Eurogroup meeting will be keenly watched.
PBOC Governor Zhou said changing reserve requirement ratio (RRR) for lenders is more suitable to tackle medium term and 'severe' excess liquidity problem according to an article written by Zhou for the October IMF meeting.
The Bank of Japan minutes from the October 30th meeting said BoJ will maintain easing until 1% CPI has been reached. Minutes said members proposed to strengthen commitment to easing policy, there should be no upper limit to its lending facility and CPI will move toward 1% in 2014. Shirikawa said overnight that Japan's economy is to remain relatively weak for the time being before resuming moderate recovery.
US lawmakers have made little progress in the past 10 days toward a compromise to avoid the harsh tax increases and government spending cuts scheduled for Jan 1st, according to Dick Durbin, a senior Democratic senator.
White House says the fiscal cliff could cut real GDP in the US by 1.4% and warned consumer spending could be limited during the holiday season.
EU & UK Headlines
Over the weekend, reports suggested Eurozone finance ministers are considering a possible haircut for Greece in 2015, according to unnamed sources however ECB's Asmussen said Greece needs packages of measures and not a debt write-down, and debt write-down is not part of the next package aimed at bridging the Greek financing gap. Finnish finance minister said Greek decisions seen at latest in Dec. 3rd Eurogroup meeting.
Italian Consumer Confidence for November missed expectations at 84.8 vs. Exp. 86.3 which was a record low.
The Spanish government will ask the European Union for a bailout of between EUR 40bln and EUR 42.5bln for its banking sector, according to government sources.
Separatists in Spain's Catalonia won regional elections on Sunday but failed to get a resounding mandate for a referendum on independence.
BoE's Tucker, a hot favourite, could be appointed as the new Governor of the Bank of England as early as next week.
German GfK Consumer Confidence Survey missed expectations at 5.9 vs. Exp. 6.2 and dropped for the first time in seven months.
European equities opened lower today with the Eurogroup meeting the key focus for market participants. Over the weekend, negative comments out of the US regarding the fiscal have also seen European equities trade lower, echoing Asian counterparts. Despite this, the Nikkei 225 outperformed other Asian equities overnight, with the utilities sector was the stand-out performer.
In individual stocks news Barclays shares are trading sharply lower today by over 4% after it was reported that Qatar Holding offloaded company warrants.
USD/JPY hit session highs of 82.64 overnight with EUR/JPY also touching 7-month highs at 107.16 shortly after the release of the slightly more dovish than expected BoJ minutes. BoJ governor Shirakawa said economy is to remain weak before resuming moderate recovery and JPY strength will have a negative impact as it weighs on exports so BoJ policy is helping keep JPY in check.
EUR/USD continues to trade sideways in close proximity to a touted option expiry at 1.2950 for 1000am NY cut (1500GMT) as markets await developments on Greece.
Overnight, GBP/USD consolidated Friday's move with trade contained in a tight range, though heading into the European session was sitting at the lower end of the range at 1.6019. GBP/USD edged up in early trade taking direction from EUR/USD initial rally only to turn and break below the Asian session's 1.6019 low.
WTI crude futures are trading lower today as markets await a decision on Greece from today's Eurogroup meeting. Negative comments from the senate regarding the fiscal cliff also weighs on sentiment with a democrat senator saying no progress has been made in the last 10 days.
In Geopolitical news, Israel has said it will do all it can to prevent Iran from re-arming Hamas after the previous Gaza operation although reports have said three Iranian missile engineers have managed to steal into the Gaza strip. The Israeli defence minister Barak has also said he is quitting political life but remaining defence chief until after the election on January 22nd.
Print 12:53, 26 Nov 2012 - Economic commentary - Source: RANsquawk
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