Market Update: UK retail sales beat expectations
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| 11:54 |
***Economic Data***
- (RU) Russia Narrow Money Supply Narrow w/e Feb 13th: (RUB): 6.76T v 6.70T prior
- (DE) Germany Jan Producer Prices M/M: 0.6% v 0.3%e; Y/Y: 3.4% v 3.2%e
- (AT) Austria Dec Producer Price Index M/M: -0.5% v +0.2% prior; Y/Y: 2.2% v 3.3% prior
- (EU) Euro Zone Dec Current Account nsa: €16.3B v €1.9B prior; Current Account Seasonally Adj: +€2.0B v -€0.9B -prior
- (UK) Jan Retail Sales Ex Auto Fuel M/M: +1.2% v -0.3%e; Y/Y: +1.9% v -0.1%e
- (UK) Jan Retail Sales (with Auto Fuel) M/M:+0.9% v -0.3%e; Y/Y: 2.0% v 0.5%e
- (GR) Greece Jan CPI EU Harmonized Y/Y: 2.1% v 2.2% prior
- (EU) Euro Zone Dec Construction Output M/M: 0.3 v 0.2% prior; Y/Y: 7.8% v 0.4% prior
- Spain Dec banks bad loan ratio 7.61% v 7.51% prior
Fixed Income
- (ZA) South Africa sold total ZAR800M in I/L 2017, 2022, and 2028 bonds
- (IN) India sold total INR120B vs. INR120B indicated in 2018, 2021 and 2041 bonds
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Japan PM Noda announces plan to double sales tax from 5 to 10%
- Optimism that a second Greek bailout deal can be signed on Monday, Feb 20th
- UK Jan retail sales data beat expectations
- German President Wulff resigns over personal financial scandal
- Switzerland said to have seized $6T in fake US Bonds
Equities:
FTSE 100 +0.40% at 5907, DAX +0.80% at 6807, CAC-40 +1% at 3426, IBEX-35 +0.70% at 8619, FTSE MIB +0.70% at 16,480, SMI +0.10% at 6226
- European shares rose as investors are optimistic that a deal on Greece is nearing its end which would enable the country to receive a €130B bailout by early next week.
- French cement maker, Lafarge [LG.FR] rose despite missing estimates on its net profit. Revenues had increased however, and the company predicted further growth in the cement market for 2012. Aker Solutions [AKSO.NO] also rose after reporting better than expected earnings
Speakers:
- German President Wulff confirmed speculation and formally announced his resignation due to personal financial scandal
- France PM Fillon reiterated view that must do everything to avoid a default of Greece. He noted that France had no difference of opinion with German Chancellor Merkel over Greece but sometimes a divergent opinion was evident within the German govt.
- Spain Econ Min Guindos commented that nothing has yet been decided on ECB role on Greek debt deal and would discuss its role. He stressed that Spain was "immunized" against Greek crisis. Spain and Europe would discuss its 2011 deficit target.
- ECB's Weidmann was said to have not supported the bond swap decision. The official believed that the ECB bond swap could make investor mistrust worse. Also, Bundesbank was concerned about possible lawsuits from the bond swap and concerned that investors might fear a similar bond swap in Portugal
- China PBoC was said to have purchased €1.0B in Spain's govt debt. The China State Administration of Foreign Exchange (SAFE) was a major buyer of the Spanish 10-year bond issue last week taking up 25% of the total at a rate of 5.40%. China had been investing in the covered bonds of Spanish banks.
- SNB Dep Board member Moser stated that the CHF currency cap had countered 'massive overvaluation' and reiterated that the SNB remained ready to act if necessary
- Swiss Govt reiterated its view that CHF remained overvalued even with current floor in EUR/CHF cross
- Portugal PM Coelho commented that Portugal planned to return to the bond market in Sept of 2013 (in line commentary). He reiterated that the country would not seek more bailout funds nor extend the current loan plan
- Hungary Econ Dep State Secy Natran stated that he expected further debate with EU about oath and salary of central bank gov
- Former-IMF official Prasad commented that it was difficult to make the case that CNY was significantly undervalued and that the currency might not appreciate against the USD in 2012. He noted that China domestic factors would determine the path of the CNY.
- Iran President Ahmadinejad commented that the region's issue must be solved internally
Currencies:
- Recent strong US. data mix and optimism that a bailout agreement on Greece would be reached by Monday's Eurogroup meeting continue to aid the risk appetite sentiment. Stronger UK retail sales data built upon the optimism. The USD was slightly softer against the major European pairs by late European morning. EUR/USD was trading at 1.3160 while the GBP/USD tested above 1.5850 area.
- The USD/JPY continued its positive tone and stayed above the 79 handle during the morning session. EUR/JPY cross was at 2-month high above the 104 level.
- The overall atmosphere remained ripe for rumors to circulate. Markets seek more clarity on any ECB role in the Greek bailout
Political/ In the Papers:
- Euro zone governments are considering cutting interest rates on emergency loans to Greece and using contributions from the ECB to 'plug' new financing gaps in the second bailout. On February 13th, there was speculation that Greece might receive a lower interest rate on its bailout loans and that the long-term debt target might be revised to 125% from 120%.
- The Telegraph's Evans-Pritchard reiterated that Greece's austerity measures will weigh on any economic recovery. In today's article, he criticized the design of the EU/IMF rescue package for Greece and stating that officials underestimated how dependent private companies in Greece are on the state. The Greek government now owes private companies about €7B. He suggested that the economic uncertainly in Greece is making it more difficult for the government to meet its asset sales targets. A large portion of the assets that Greece's government is looking to sell is property, so the sale of these assets could worsen the state of the domestic real estate market.
- The ratings agency S&P reported that Hungary's government needs to overhaul the economy in order to relieve pressure on its sovereign rating. S&P had cut Hungary's rating to junk status near the end of 2011. There is currently a negative outlook on the country.
- German Chancellor Merkel postponed her trip to Rome to meet with Italy Prime Minister Monti and President Napolitano today following the resignation of German President Wulff. The President was facing calls to resign for allegedly taking a low-interest loan arranged during his tenure as minister president in the German state of Lower Saxony.
***Looking Ahead***
- (PT) EU/IMF continues third review of Portugal
- 6:00 (PT) Portugal Jan Producer Prices M/M: No est v -0.1% prior; Y/Y: No est v 4.4% prior
- 6:00 (BR) Brazil Feb IBGE CPI IPCA-15 M/M: 0.6%e v 0.7% prior
- 6:00 (BR) Brazil Jan Unemployment Rate: 5.5%e v 4.7% prior
- 6:10 (UK) DMO to sell Bills
-6:30 (EU) ECB's Knot speaks in London
- 7:00 (CA) Canada Jan Consumer Price Index M/M: 0.3%e v -0.6% prior; Y/Y: 2.3%e v 2.3% prior; CPI index: No est v 120.2 prior
- 7:00 (CA) Canada Jan CPI Core M/M: 0.1%e v -0.5% prior; Y/Y: 1.9%e v 1.9% prior
- 7:30 (IN) India Forex Reserves: No est v $293.9B prior
- 8:00 (PL) Poland Jan Sold Industrial Output M/M: -5.3%e v -4.9% prior; Y/Y: 9.5%ev 7.7% prior
- 8:00 (PL) Poland Jan Producer Prices M/M: 0.3%e v 0.3% prior; Y/Y: 8.0%e v 8.1% prior
- 8:30 (CA) Canada Jan Leading Indicators M/M: 0.6%e v 0.8% prior
- 8:30 (US) Jan Consumer Price Index M/M: 0.3%e v 0.0% prior; CPI Ex Food & Energy M/M: 0.2%e v 0.1% prior; CPI NSA: 226.573e v 225.672 prior
- 10:00 (US) Jan Leading Indicators: 0.5%e v 0.4% prior
- 11:00 (US) Fed to purchase $4.25-5.00B in Notes
- 14:00 (AR) Argentina Dec Economic Activity Index M/M: No est v 0.8% prior; Y/Y: 6.5%e v 7.6% prior
- 20:30 (CN) China Jan Property Prices
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