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US Morning Briefing

Thu, Oct 29 2009, 12:58 GMT
by RANsquawk Research Team

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Overnight News

Asia:

JGB’s rose as 10-year yields near the highest level in 11 weeks attracted investors and local stocks extended a global drop, boosting demand for the relative safety of government debt. JGBs were trading at 138.00 (+0.33) at 0622 BST. Nikkei (-1.83%) slid below 10,000 to a three-week closing low as a strong JPY hurt exporter shares and weak US data renewed worry about global economic growth, sparking a broad sell-off on Wall Street. Japan Airlines rose nearly 3% on news that the transport minister will brief about plans to revive Japan Airlines Corp after the close on Thursday, with investors keen to see if the government will announce the use of public funds to bail out the struggling carrier.
BBG/RTRS)

IMF raised its Asian growth forecast today predicting growth of 2.8% this year and 5.8% next year, higher than previous forecasts of 1.2% and 4.3% respectively. (BBG)

US:

NY Fed adviser says good chance FOMC could change rate language next week. NY Fed adviser is Michael Woodford has no role on decision making FOMC. (Sources)

US homebuyers tax credit to be extended through April 2010 under deal reached by key Senators, according to sources. (RTRS/BBG) Tax credit would remain at USD 8,000 for first-time homebuyers; separate USD 6,500 credit for repeat buyers, according sources. In other news, House leaders may unveil health-bill today, according to house rep. Pelosi.

Bar. Cap. US Treasury index extensions seen at +0.06years.


Bonds

European Government Bonds:

Bund futures have traded mixed weighed by over EUR 5bln of issuance from Italy in the form of 3 & 10yr BTP’s, relatively hawkish comments from Weber and a raft of Eurozone data.

ECB's Weber said today that we must start withdrawal of stimulus as soon as possible and may not offer 12- month bank loans next year. (BBG)

  • German Unemployment Change (000's) (Oct) M/M -26K vs. Exp. 15K (Prev. -12K)

  • German Unemployment Rate SA (Oct) M/M 8.1% vs. Exp. 8.3% (Prev. 8.2%) (BBG)

  • Eurozone Business Climate Indicator (Oct) M/M -1.78 vs. Exp. -1.90 (Prev. -2.07)

  • Eurozone Consumer Confidence (Oct) M/M -18 vs. Exp. -18 (Prev. -19)

  • Eurozone Economic Confidence (Oct) M/M 86.2 vs. Exp. 84.4 (Prev. 82.8)

  • Eurozone Industrial Confidence (Oct) M/M -21 vs. Exp. -22 (Prev. -24)

  • Eurozone Services Confidence (Oct) M/M -7 vs. Exp. -8 (Prev. -9) (BBG)

  • Italian BTP Tap Auction for EUR 2.5bln, 2.5% 01-Jul-12, Bid/Cover 1.58 vs. Prev. 1.3

  • Italian BTP Tap Auction for EUR 2.62bln, 4.25% 01-Mar-20, Bid/Cover 1.58 vs. Prev. 1.4 (BBG)

Bar. Cap. Euro Treasury index extensions seen at +0.09 years.

Maturity251030Bund (Dec09)
Level1.3072.4313.2554.031121.72
Change (bps)2.5091.200-0.115-0.1410.05


Gilts:

NYSE LIFFE gilt futures have traded mixed today digesting mixed data and with commentary in the UK markets still dominated by the various expectations over the future of the BoE’s QE programme.

  • UK Net Consumer Credit (Sep) M/M -0.3bln vs. Exp. -0.2bln (Prev. -0.3bln, Rev. to -0.4bln)

  • UK Net Lending Sec. on Dwellings (Sep) M/M 0.9bln vs. Exp. 0.8bln (Prev. 1.0bln, Rev. to 1.3bln)

  • UK Mortgage Approvals (Sep) M/M 56.2K vs. Exp. 53.6K (Prev. 52.3K, Rev. to 53.0K)

  • UK Net Mortgage Lending (Sep) M/M GBP 0.922bln vs. Exp. GBP 0.9bln (Prev. GBP 1.284bln)

  • UK M4 Money Supply (Sep F) M/M 0.8% vs. Prev. 0.7% • UK M4 Money Supply (Sep F) Y/Y 11.6% vs. Prev. 11.3% (BBG)

Economists expect Bank of England to pump another GBP 25bln into the economy. (Times)
A poll of 62 City economists showed that two thirds expect the MPC to vote to extend the GBP 175bln scheme of quantitative easing at its rate meeting next week. However, analysts were split over whether the limit would be raised by GBP 25bln or GBP 50bln, with GBP 25bln winning by only one vote.

Bar. Cap. Sterling Gilts month end extension seen at -0.03 years.


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