News Headline Summary

EU MID-SESSION UPDATE - 03/01/13

Equity indices traded lower today, as market participants booked profits posted yesterday as investors reacted positively to a deal which averted the so-called fiscal cliff. The inability to sustain positive momentum was also evident in currency markets, where EUR/USD and GBP/USD both seen lower by around 70pips, which in turn lifted the USD index back towards the 100DMA line. In terms of EU related commentary, eKathimerini reported that nonperforming loans in Greece soared in 2012, with bank officials estimating the rise at some 50% on an annual basis. This means that the sum of NPLs exceeds the total of the funds set aside for the recapitalization of the local credit system and unless the growth of new NPLs is contained, banks may need yet another recapitalization process at the end of 2013 according to sources. However this failed to gain enough traction and price action in FI markets remained depressed, with Mar-Bund trading in a tight range for much of the session. The latest round of issuance from France (EUR 7-8bln) was well absorbed, as was the first Gilt auction by the DMO which benefited from cheapness relative to 2/5/10s fly. Going forward, market participants will get to digest the release of the latest Challenger Job Cuts, ADP Employment and Weekly Jobs reports ahead of the monthly jobs report from the BLS on Friday. In addition to that, the most recent FOMC policy meeting minutes will be released at 1900GMT.

03 Jan 2013 - 12:06 - - Source: RANsquawk

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