News Headline Summary

EU MID-SESSION UPDATE - 13/12/12

European equities are trading in minor negative territory heading into the North American crossover after bond auctions from the Italian and Spanish treasuries have produced average results. On the surface, the Spanish auction appeared better than the previous with the bid-to-cover ratios being higher however due to the low issuance, this was expected. The Italian bid-to-covers were weaker than the previous auction in the 3-year and as such the IT/GE and SP/GE 10-year spreads have widened in the morning session.

During yesterday’s US session the FOMC announced they were to keep rates unchanged and increased their QE by USD 45bln. The announcement of thresholds for unemployment at 6.5% and inflation no higher than 2.5%, in-fitting with the Evans rule, saw speculation that the Fed could ease until these targets hit, although Bernanke clarified that the program could be adjusted at any time, and hitting the target may not mean purchases would be immediately halted.

Elsewhere, the SNB kept their 3-month target Libor rate unchanged at 0.00% and the EUR/CHF cap unchanged at 1.2000. There were outside chances that the SNB could take action in the wake of Credit Suisse and UBS charging some customers for short-term CHF accounts in recent weeks. Following the decision SNB’s Jordan later came out and said the SNB did not exclude any measures when asked about negative interest rates, however declined to comment on whether the SNB discussed negative interest rates.

EU’s Juncker also today confirmed Greece are to receive their next tranche of aid following the most recent Eurogroup meeting and the debt buyback. The total aid package will be EUR 49.1bln with EUR 34.4bln to be disbursed in December. This was widely expected and as such no reaction was seen across major European asset classes.

13 Dec 2012 - 07:01 - Fixed Income Bank Speaker - Source: RANsquawk

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