- (DK) Denmark July Consumer Confidence: +0.1 v -3.0e
- (ES) Spain May Mortgages-capital loaned Y/Y: -32.4% v -26.4% prior; Mortgages on Houses Y/Y: -30.5% v -31.3% prior
- (CH) Swiss Jun M3 Money Supply Y/Y: 7.4 v 6.3% prior
- (TW) Jun Industrial Production Y/Y: -.24% v +0.5%e; Commercial Sales Y/Y: -0.9% v +0.7%e
- (HK) Hong Kong Jun CPI Composite: 3.7% v 4.0%e
- (PH) Philippines sold total PHP7.5B vs. PHP7.5B indicated in 3-month, 6-month and 12-month Bills
- (DE) Germany sold €2.703B in 12-Month BuBills; Avg Yield -0.0540% v +0.0191 prior; Bid-to-cover: 2.3x v 2.8x prior
- Risk aversion remains heightened on global growth and European periphery concerns
- Numerous more Spanish regions said to be seeking central gov't assistance
- Spain borrowing cost hits record high while safe haven flows sends US, UK, Finland, Swiss, Germany , Norway and Singapore yields to record low levels
- IMF considering ending its support to Greece
FTSE 100 -1.7% at 5556, DAX -1.6% at 6527, CAC-40 -1.9% at 3132, IBEX-35 -4.1% at 5988, FTSE MIB -4% at 12,542, S&P 500 Futures -1.1% at 1344
- European equity indices opened the session lower and have continued to weaken on renewed concerns related to Greece and the Spanish regions. The IBEX-35 has lost over 4% on the session, as the index hit multi-year lows (below 6,000). The weakness in the IBEX-35 has come as Spain's 2, 5, 10 and 30 year yields have all hit record highs, with the 5-year yield moving above 7%. In Greece, concerns about the country's EU/IMF bailout agreement have driven the Athens Stock Exchange (ASE) lower by over 4.3%. Amid the overall negative tone for the banking sector, financial companies which have underperformed include Intesa [ISP.IT], Unicredit [UCG.IT], KBC [KBC.BE] and BBVA [BBVA.ES]. Large resource related companies are trading lower, tracking the decline in commodity prices (COMEX Copper -2.8%, NYMEX Crude Futures -3%). In terms of corporate earnings, companies seen reporting during the US morning include Hasbro, Haliburton and McDonald's.
- In the Netherlands, Philips [PHIA.NL] has gained over 7%, as the company reported better than expected quarterly results, while property company Wereldhave [WHA.NL] is lower by over 10%, after issuing a profit warning. Swiss bank Julius Baer [BAER.CH] has gained over 1%, as the firm reported better than expected net new money inflows for H1. In France, Peugeot [UG.FR] has moved slightly higher after disclosing a commercial vehicle partnership in Europe with Toyota. Among the individual movers in the UK, Aquarius Platinum [AQP.UK] is lower by over 4% (reported H1 results), while African Barrick Gold [ABG.UK] has lost ~3.5% (issued Q4 production update). UK staffing firms are trading lower amid reports that UK tax officials are planning to probe whether certain recruitment firms engaged in tax avoidance schemes.
- Spain Econ Min De Guindos: rules out full-scale country bailout of Spain
- Bank of Spain (BOS) Dep Gov Restoy commented that the European debt crisis illustrated the flaw in the monetary union and noted that the ECB required tools to restore control of country's financing costs. European banking union was urgently needed
- Bank of Spain (BOS) forecasted its Q2 GDP Q/Q: -0.4% v -0.3% prior; Y/Y: -1.0% v -0.4% prior. It reiterated the view that domestic demand declined accelerated in Q2.
- EU Commission report on Public Finances in Euro Zone: Q1 Euro Debt at 88.2% vs. 87.3% q/q
- Germany govt official stated that it had no information on IMF position on Greece and have not received any signal from IMF that it would not take part in further Greek aid [**Note: Weekend press noted that the IMF would not continue to pay any additional aid to Greece]
- Ten Italian Cities said to face financial problems
- South Africa Central Bank (SARB) commented that its economic growth remained below potential. Manufacturing and mining have struggled in recent years. Banks and consumer spending have buoyed growth recently
- Japan Senior Vice Fin Min Igarashi had no comment on current JPY FX level but did reiterate the G7 view that Japan would act on abrupt and speculative currency movements
- Thailand Central Bank (BOT) reiterated its view of no irregular price movement experienced in THB currency (Baht) as the recent Baht weakness was due to European crisis concerns
- Netherlands Bureau for Economic Policy Analysis (CPB): May Global Trade Volume +2.5% y/y
- Risk aversion theme was heightened ahead of the European equity open with global growth concerns and European periphery concerns continuing to mount. Weekend press noted that numerous more Spanish regions said to be seeking central govt assistance coupled with speculation that the IMF was considering of ending its support to Greece
- The EUR/USD hits fresh 2-year lows below the 1.21 handle as the Euro was back nearing the middle of its historical range. Ideally the ECB should not concerned with euro currency level but with its volatility (which has been orderly to date) as a weaker euro currency was positive for EMU exports and the economic recover
- The JPY currency continued to strengthen on risk aversion flows with the USD/JPYpair moving below the 78 handle for 7-week lows and EUR/JPY cross at 12-year lows below 94.50 level.
- Spain borrowing cost hits record high with the 5-year yield moving above the pivotal 7.0% level. TTN noted that the 7.0% level in 5-year yields had been widely viewed as the point where government borrowing costs become unsustainable, and is the level at which Portugal, Greece and Ireland were forced to seek bailouts
- Safe-haven flowed continued to aid various countries with Germany, US and XXX hiting fresh record lows in various maturities.
Political/ In the Papers:
- The Bank of Spain (BOS) released its Q2 GDP forecast at -0.4% against the -0.3% in the prior quarter (y/y at -1.0% versus -0.4% prior). The tax receipts indicated that the deficit targets are at risk. It reiterated its view that the decline in domestic demand accelerated in the quarter with further cuts and reforms needed to calm the markets.
- The Spanish press noted that Spain was said to have estimated that regions require up to €26.4B. In early July, Spain's Finance Minister said its regional funding tool had identified a maximum need of €18B for the year.
- The Telegraph's Ambrose Evans-Prichard said the Spanish government is losing market credibility, and suggested the declining credibility of Spain is one of the factors causing investors to sell Spanish assets. He also suggested the bank bailout agreement is hurting Spanish bonds because it could increase the country's debt levels if direct bank recapitalizations are not allowed. A full bailout could cost about €400B and may have contagion effects for Italy.
- According to analysis of US Fed Reserve data by the FT, bank failures, write downs and sale of loans/businesses sent US assets of European banks retreating by $540B from highs of $1.5T (Sept 2007). The US assets held by the euro zone banks in March stood at about $973B (the lowest level since 2005). Assets held by German banks declined from a peak of $427B (2007) to $267B. In France it declined from $420B (Dec 2007) to $373B. The retreat by banks of smaller euro zone states is more dramatic where in Ireland assets declined from $130B (Sept 2008) to $3.6B.
- In the weekend edition of Der Speigel, according to an unnamed senior European official, the IMF will not continue to pay any additional aid to Greece. An IMF withdrawal would create a funding shortfall of up to €50B. The official added that it is already clear that Greece could not meet its promise to reduce its debt to 120% of GDP by 2020. A September Greek insolvency has become more likely.
- The Greek Finance Minister Stouraras was reported to have told former US president Bill Clinton that Greece was in a "Great Depression".
- The financial press reports indicated that Murcia and Catalonia were among several provinces considering requesting a bailout. Note that Catalonia is the region with the most debt (about €45B, almost 30% of all autonomous region debt). The leader of Murcia will request €200-300M in funding.
- 07:30 (BR) Brazil Central Bank Weekly Economists Survey
- 08:30 (US) Jun Chicago Fed National Activity Index: No est v -0.45 prior
- 09:00 (BR) Brazil Jun CAGED Formal Job Creation: 142.2Ke v 139.7K prior
- 09:00 (FR) France Debt Agency (AFT) to sell €7.5B in 3-month, 6-month and 12-month Bills
- 09:30 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
- 09:30 (EU) ECB announces weekly settlements in its Govt Bond Purchases Program (SMP)
- 09:45 (UK) BOE to buy £1.0B in 2015-2019 Gilts in reverse auction
- 10:00 (EU) Euro Zone July Advanced Consumer Confidence: -20.0e v -19.8 prior
- 10:30 (EU) EU Foreign Ministers Meet `Eastern Partnership' Officials
- 11:00 (BR) Brazilian Central Bank President Tombini holds Conference Call
- 11:00 (US) Fed to purchase $4.25-5.00B in Notes
- 11:30 (IS) Israel Central Bank Interest Rate Decision: Expected to leave the Base Rate unchanged at 2.25%
- 11:30 (US) Treasury to sell $30B in 3-Month and sell $27B in 6-Month Bills
- 12:00 (US) President Barack Obama delivers remarks via webcast
- 14:00 (PT) Portugal Year-to-Date Budget Report
- 15:00 (AR) Argentina Jun Trade Balance: No est v $1.5M prior
- (AR) Argentina July Consumer Confidence: No est v 44.38 prior
- 22:30 (CN) China July HSBC Flash Manufacturing PMI: No est v 48.2 prior