Complete absence of supply, as well as month-end related flows supported fixed income markets in Europe and the UK throughout the session this morning. This was especially the case in Europe, where month-end extensions for this month are above avg. (Barcap pan Euro aggregate month end extension: +0.13 yrs). As a result, 2s/10s Germany are marginally flatter at 140bps (-c.3bps) – support level seen at 133bps (December base level), while 10s/30s (c. 70bps) are trading at levels not seen since mid-June 2012. The release of an encouraging jobs report from Germany, which revealed that the number of people out of work in Germany fell a seasonally adjusted 16,000 to 2.92 million failed to prop up investor sentiment and instead, less than impressive corporate earnings meant that stocks in Europe are seen lower across the board. On that note, Santander (-3.0%) said that of the EUR 18bln in provisions it had set aside, which were up by EUR 6.6bln compared with 2011, there was EUR 12.6bln set aside for non performing loans, and a gross EUR 6.1bln to cover Spanish property exposure. Elsewhere, Le Figaro reported that Credit Agricole (-3.3%) plans to write down goodwill. However the amount of the write-down hasn't yet been decided. On the other hand, even though Deutsche Bank (+1.3%) posted a net loss for the quarter, co. shares outperformed its peers, after it became apparent that losses were largely a result of write-downs and litigation charges linked to its restructuring programme. Going forward, market participants will get to digest the release of the latest weekly jobs, as well as the Chicago PMI report for the month of January.
Print 12:16, 31 Jan 2013 - Market Analysis - Source: RANsquawk
RANsquawk provides audio news and commentary for over 15,000 professional traders and brokers worldwide. Services include: