Greek debt officials confirm EUR 30bln target has been met for the debt buyback, paving the way for the country to receive their next tranche of aid tomorrow
OPEC retain production ceiling at 30MBPD alongside expectations. Discussions on future Secretary General are ongoing
Attention turns to FOMC rate decision at 1730GMT/1130CST, followed by Fed projections
RANsquawk European Morning Briefing Video: http://youtu.be/8P8Po5dopFI
European equity markets are seen mixed to minor positive with most participants awaiting the key FOMC meeting later today and the specifics behind the replacement of operation twist. Remember tonight’s announcement is a three step process with the decision itself, followed by projections and Bernanke’s presser.
Earlier today, Italy managed to sell the full EUR 6.5bln planned in their 12-month offering with a firmer B/C than when tapped last in mid-November in spite of the recent fragility in Italian politics. In fact the yield in today’s auction came in at its lowest since March which may hold promise ahead of the 2015 and 2026 bond auctions tomorrow. In terms of the 10yr government bond yield spreads Italy and Spain are seen around 6.5bps and 8bps tighter over bunds at the time of writing.
In the FX market, GBP/USD is seen higher following better than expected jobs data from the UK where jobless claims change for November came in a -3.0k M/M vs. Exp. 7.0k. Also the JPY has continued its recent weakening trend ahead of this Sunday’s elections in Japan however the USD/JPY pair has been capped by talk of several yards of offers into the touted barrier level at 83.00. Elsewhere there has been market talk of a Swiss name buying a decent amount of overnight at the money vols in the European session in order to ensure long gamma positioning ahead of the FOMC today and SNB decision tomorrow.
In the energy market, WTI is seen higher ahead of the NYMEX pit open as OPEC members continue to bicker in Vienna. Accompanying this has been the Secretary-General saying that oil prices are comfortable for suppliers and consumers. This morning has also seen the monthly report from the IEA who raised their global oil demand forecast for both 2012 and 2013.
Overnight, North Korea launched a rocket at 0951 local time with reports saying the rocket fell into the sea east of the Philippines soon after. The EU are threatening fresh sanctions against North Korea following the rocket launch although the country have said they are not violating any UN resolutions. Norad said the missile deployed object seemed to reach orbit. USD/JPY immediately moved higher following the announcement of the launch although retraced the move instantly.
In China, Nomura have said they see Chinese GDP growth in the first half of 2013 at 8.2% and 7.2% in the second half.
EU & UK Headlines
The Greek debt agency have confirmed Greece has received offers of EUR 31.9bln during the extended timeframe for the buyback. The country are to buy back bonds at average price of EUR 0.338 on the EUR and said they will only accept the terms if they are to receive EUR 1.29bln of financing from the EFSF. With the latest EU summit set to begin tomorrow, a decision on the next disbursement of Greek aid is expected.
UK employment data printed better than expectations with Jobless Claims falling by 3,000 after an expected increase of 7,000. Employment in the private sector in the UK was at the highest since record began in 1999. ILO Unemployment and Claimant Count rate both came in in-line with expectations at 7.8% and 4.8% respectively.
Speaking on the fiscal cliff, President Obama said he is willing to cut revenue demand to USD 1.4trl while the US House speaker Boehner said Obama's reduced revenue demand is still unacceptable. However, in a poll, President Obama won over almost 50% of Republicans support for his taxes mandate on raising taxes on the wealthy.
Major European bourses are trading in minor positive territory playing wait and see ahead of today's FOMC rate decision later on today. One of the biggest movers in Europe today are Peugeot with shares trading up 6.7%. Two stories have contributed to the move with Algeria rumoured to be purchasing a stake in the company and increased cost-cutting measures as the company said they are to cut a further 1,500 jobs.
EUR/USD has lifted from the European open as peripheral spreads against the German benchmark compressed throughout the morning. The pair ran stops thorugh 1.3020 and 1.3030, reaching a session high at 1.3042, however further upside could be capped by offers at 1.3050. Market focus turns to the FOMC rate decision.
GBP/USD has moved in-line with its European counterpart as the USD-index has moved lower throughout the morning as the FOMC are expected to expand their QE programme at today's meeting.
USD/JPY was relatively range-bound overnight, however heading through the European open talk of US names buying pushed the pair to 8-month highs at 82.94, however further upside was capped with large offers around 83.00 which are related to a touted option barrier at the level. Cross-buying in EUR/JPY assisted weakness in the JPY currency.
OPEC are meeting today in Vienna and delegates have confirmed they have decided to leave production ceiling at 30MBPD which was expected before the meeting. Earlier in the session, the Iranian oil minister said would prefer the ceiling to be reduced to 28MBPD but is happy to keep at 30MBPD. The key decision to be made at the meeting is on who is to replace the outgoing Secretary General with Iraq, Iran and Saudi Arabia all nominating candidates.
As a reminder, DoE inventories are due to be released at 1530GMT/0930CST with a draw-down expected in the headline figure.
12 Dec 2012 - 12:56 - - Source: RANsquawk
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