EU Market Update: Eurogroup meets later today with dealers eyeing any possible extension of Greek bailout conditions


Economic Data

- (IN) India Sept Industrial Production Y/Y: -0.4% v +2.8%e

- (IN) India Oct CPI Y/Y: 9.8% v 9.7% prior

- (JP) Japan Oct Preliminary Machine Tool Orders Y/Y: % v -2.8% prior

- (DE) Germany Oct Wholesale Price Index M/M: -0.6% v 1.3% prior; Y/Y: 4.6 v 4.2% prior

- (ES) Spain Sept House transactions Y/Y: 0.9% v 3.0% prior

- (DK) Denmark Oct CPI M/M: -0.1% v 0.0%e; Y/Y: 2.3% v 2.4%e

- (DK) Denmark Oct CPI EU Harmonized M/M:-0.1% v 0.0%e; Y/Y: 2.3% v 2.4%e

- (EU) ECB: €881M borrowed in overnight loan facility €572M prior; €248.5B parked in deposit facility vs. €257.8B prior

- (NL) Netherlands Sept Trade Balance: €3.6B v €2.1B prior

- (CN) China M2 Money Supply Y/Y: 14.1% v 14.5%e; M1 Money Supply Y/Y: 6.1% v 7.1%e; M0 Money Supply Y/Y: 10.5% v 12.9%e

- (CZ) Czech Sept Current Account (CZK): -7.1B v -6.3Be

Fixed Income:

- (IN) India sold total INR100B vs. INR100B indicated in 3-month and 12-month Bills

- (SK) Slovakia Debt Agency (ARDAL) sells €94.2M in floating Nov 2016 Bonds; Avg Price 97.8091 v 94.0115 prior, bid-to-cover: 2.44x

- (DE) Germany sold €3.52B in 6-Month BuBills; Avg Yield -0.116% v -0.218% prior; Bid-to-cover: 2.0x v 2.3x prior


SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

***Notes/Observations***

- US bond markets closed Monday for Veterans Day.

- China trade data better-than-expected; New CNY Loans data below expectations

- India's economic growth is expected to slow to ~6% due to a number of domestic issues

- Greek Parliament approves its 2013 budget by a comfortable majority of 167 deputies

- Eurogroup meeting of European finance ministers today; could announce the 2-year extension of Greek bailout conditions


Equities

- Indices: FTSE 100 +0.20% at 5,782, DAX +0.20% at 7,177, CAC-40 -0.10% at 3,418, IBEX-35 -0.60% at 7,594, FTSE MIB +0.10% at 15,200, SMI -0.10% at 6,705, S&P 500 Futures +0.24% at 1,379

- European equity indices are trading mixed, as traders focus on the upcoming Eurogroup meeting related to Greece and mixed economic data out of China. Spain's IBEX-35 has underperformed, amid the rise being seen in the country's government bond yields. European banks are mostly lower, led by declines in Credit Agricole and Banco Santander. Resource related firms are trading mixed, following data out of Japan and China.

- In the UK, aerospace/defense equipment firm Cobham [COB.UK] is lower by over 7%, as the firm made cautious comments regarding the outlook for the US defense/security market. Homebuilder Bovis Homes [BVS.UK] has traded marginally higher following the release of its interim management statement. Shares of industrial services firm Cape plc [CIU.UK] are lower by over 25%, after the company disclosed a profit warning. Xstrata [XTA.UK] and Glencore [GLEN.UK] have underperformed the FTSE 100 amid concerns that the structure of the shareholder vote related to their proposed merger could put the transaction at risk. In Spain, shares of Banco Popular [POP.ES] have moved higher by over 2%, after the company disclosed additional details related to its planned €2.5B capital raise. Telecom Italia [TIT.IT] has advanced by over 3% on speculation that Naguib Sawiris is mulling an investment in the company. In France, advertising services firm Publicis [PUB.FR] has gained over 2%, as the company said that its Oct organic sales rose by more than 7%.

- FTSE 100 movers (Admiral Group +2.9%, WPP +2.2%, Lloyds +2%, InterContinental +1.4%, Associated Briitsh Foods +1.3%; Anglo American -1.2%)

- CAC-40 (Publicis +2.8%, Alcatel-Lucent +1.4%; Credit Agricole -1.4%, Lafarge -1.3%, EADS -1.2%, STMicroelectronics -1%)

- DAX movers (Commerzbank +2.1%, Siemens +1.2%, Lufthansa +1.1%, Henkel +1%)

- IBEX-35 movers (Obrascon -2%, Sacyr -1.9%, Gamesa -1.7%, Grifols -1.5%, Santander -1.4%; Banco Popular +4%)

- FTSE MIB movers (Telecom Italia +4.5%, Pirelli +1.2%, Atlantia +1.1%; Banca Popolare -2.2%, Banca Monte dei Paschi -1.9%, Davide Campari -1.5%, Buzzi Unicem -1.4%, Fiat -1%)

Speakers:

- EU's Juncker stated that the Greece EU/IMF/ECB Troika report was sent overnight but added there would not likely be any definitive decision on Greece at Eurogroup today. Her would like next disbursement for Greece ASAP

- Italy PM Monti reiterated that those who think Italy needed aid are wrong and had no plan on asking for a bailout. He expected Italy GDP to expand from Q2 2013 and achieve a structural balanced budget in 2013. Italy's debt will start to decline in 2014 and its public debt had risen less than EU average

- Moody's commented on global economic recovery and noted that the weak pace was seen until 2014 and being slowed down by economic adjustment. It noted that a deeper than expected Euro Zone recession posed risk to macro outlook as did excessive US fiscal tightening in 2013

- EU's Rehn commented that he did not expect that France would be able to meet target deficit 3% of GDP by 2013 under current program and that it was more likely to be reached in 2014 with GDP at 1.2%. For now European Commission would refrain from demanding more austerity from France in 2013 but did not rule out giving an "early warning"

- SNB official reiterated that the central bank was prepared to take additional measures to protect the economy if a further slowdown should make it necessary

- Fitch's Riley commented that Italy was performing well and in line with expectations but the downward revision to Italy growth was a key concern. Fitch would conduct review on Italy by year end. Policy continuity post election a concern in Italy, vulnerable to potential re-contagion. On other peripherals. He noted that the actual size of Spain 2012 budget deficit was a concern but reiterated that Spain decision on ESM aid would not affect ratings. Ireland regaining market access was a positive and was mulling a positive rating development for Ireland. Sharing bank recap cost a positive for Ireland while non-performing bank asset quality was an Ireland concern

- Turkey Central Bank Gov Basci stated that it might take policy action in response to further TRY currency appreciation including a measured rate cut as soon as Nov or Dec

- Poland Central Banker Winiecki commented that he saw more chance of weaker polish economic scenario with 2013 GDP seen below 1%. He saw one more rate cut of 25bps before pause period to assess impact

- Poland Central Banker Chojna-Duch (dovish): Dec rate cut would be seen as justified

- Israel Central Bank Minutes of Rate Meeting: Vote to cut Base rate in Oct was 4 to 2

- China Housing Ministry stated that would support reasonable demand for owner occupiers and that the overall housing prices had stabilized. China would steadfastly enforce property controls.

- Japan Opposition (LDP) Policy Chief Amari commented that LDP would likely to accept compromise related to bond bill

- IEA forecasted that the US to become world's biggest oil producer by 2017 and could be self-sufficient in net terms by 2030. This could have an impact on US defense of world's shipping lanes and supply routes. US has raised production by 2.59M b/d in last 5 years.
Overall the IEA saw global oil demand growing by 1/3 by 2035 with China, India, and the Middle East accounting for 60% of the gains

Currencies:

- The European session was quiet in thin trading ahead of the Eurogroup meeting later today. The EUR/USD saw its earlier gains it day evaporate despite Greek lawmakers approval its 2013 budget. Risk appetite found it hard to find its footing despite those recent indications that the Chinese economy was emerging from a drawn-out slumber.

- The USD/JPY remained below the 80 handle. The Japanese GDP data provided fresh pause in the risk-on mentality. Some analysts noted that repatriation flows thia week could further raid the JPY coupled by JGB issuance inflows by foreign investors

Political/In the Papers:

- (EU) There are concerns that the US "fiscal cliff" could worsen the EU debt crisis - Telegraph's Ambrose Evans-Pritchard; Comments on how the Euribor-OIS spread (measure of the ability of European banks to obtain US dollar funding) has started to rise amid the recent concerns about the fiscal cliff.

-(EU) Moody's comments on global economic recovery: Weak pace seen until 2014 and being slowed down by economic adjustment; Deeper than expected Euro Zone recession poses risk to macro outlook

- (EU) According to Fitch, money market funds in Europe have moved assets into Asian and core euro zone countries - FT

-GR) There are concerns that low levels of collateral could limit the ability of Greece's banks to participate in local treasury bill auctions - FT; Greece is looking to sell Treasury bills this week in order to cover about €5B in redemptions scheduled for Nov 16th; However, Greek banks which are expected to purchase the bills are said to have been only able to raise about €3.5B in collateral which is eligible to be parked at the ECB.

- (GR) Greece Parliament passed its 2013 budget; Final tally: 167 in favor, 128 opposed, 4 abstain. be issued on Nov 16th.

- (GR) ECB's Asmussen: among EMU states there is not much appetite for a 2nd Greek debt restructuring, but there are a menu of options for aiding Greece; Giving Greece a 2-year extension is a cheaper option than a Greek default or exit.

-(IT) Italy Debt Agency (Tesoro) Chief: Not expecting the ECB to purchase Italy bonds; Italy not planning to approach the bailout fund; Highlights that debt levels are currently sustainable at the current yields; will seek to extend maturities; may soon launch a 15 year offering

- (PT) German Chancellor Merkel: No reasons to renegotiate Portugal's aid plan - press interview

- (US) Moody's: Would maintain US rating, outlook in the event of a fiscal cliff; delaying budget action until 2013 looks increasingly likely; Must see US commitment to achieve budget agreement, credible timetable for reforms to maintain AAA rating.


Looking Ahead

***All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)

- PO (PT) German Chancellor Merkel visits Portugal, Attends Conference

- (EU) EU) OECD Sept Leading Indicator: No est v 100.2 prior

- 06:00 (IS) Israel to sell 2016, 2018, 2023 bonds

- 06:00 (IS) Israel to sell 2017, 2022 I/I bonds and 2020 Floating Rate bonds

- 06:30 (CL) Chile Central Bank Economist Survey

- 06:30 (US) Daily Libor Fixing

- 08:00 (IT) Italy Debt Agency chief Cannata speaks in Rome

- 08:00 (PL) Poland Sept Current Account: -€730M e v -€633M prior; Trade Balance: +€100Me v -€48M prior; Exports: €12.8Be v €12.0B prior; Imports: €12.5Be v €12.1B prior

- 08:00 (RO) Romania to sell Up to RON800M in 12-month Bills

- 08:45 (DE) German Chancellor Merkel to visit Portugal for talks With PM Coelho

- 09:00 (MX) Mexico Sept Industrial Production M/M: +0.4%e v -0.8% prior; Y/Y: 3.1%e v 3.6% prior

- 09:00 (ES) Spain Fin Min De Guindos at European Parliament Panel in Brussels

- 09:00 (FR) France Debt Agency (AFT) to sell up to €6.8B in 3-month, 6-month and 12-month Bills

- 09:30 (EU) ECB Calls for bids in 1-Month Tender

- 09:30 (EU) ECB announces weekly settlements in Govt bond purchases

- 11:00 (EU) Euro-Area Finance Ministers Meet in Brussels

- 15:30 (UK) PM Cameron speaks at Lord Mayor's Banquet in London

- (PE) Peru Sept Trade Balance: $206.0Mest v $48.0M prior