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US Morning Briefing

Thu, Dec 17 2009, 12:52 GMT
by RANsquawk Research Team

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Overnight News

Asia:

JGB's traded relatively range bound overnight with a flattening yield curve prompted by reports that Japan is looking to trim spending requests to meet its cap on new bond issues negated by a largely stronger Nikkei. At 0623 GMT JGB's were trading 139.79 down 5 ticks.

The Nikkei eventually closed down 0.1% slipping from seven-week highs hit earlier in the day, as investors pocketed profits on a rally in big banks such as Mitsubishi UFJ Financial Group. But Mazda Motor Corp rose after the Yomiuri newspaper reported that Japan’s fifth-largest automaker will reach a formal agreement with Toyota Motor Corp by the end of March to work together on hybrid technology. Trading activity was subdued as investors became increasingly reluctant to take fresh positions as the year-end draws near. (RTRS)

In other news, The Bank of Japan is likely to keep its uncollateralized overnight call rate at 0.1% when its monetary policy board meets. (Nikkei Daily) Elsewhere, PBOC's Zhu said that global financial markets are yet to stabilise and 60% of world’s growth this year has been from China. Zhu also said that USD will weaken on rising deficit. (BBG)

US

US House of Representatives backed USD 155bln jobs bill, of which TARP programme would fund USD 75bln, that seeks to create jobs and blunt the impact of the worst recession since the 1930s. (RTRS)


    Bonds

    EUROPEAN GOVERNMENT BONDS

    Bund futures have ticked higher through the morning in the wake of yesterday's news that S&P have downgraded Greece's debt ratings and with equities lower led by basic material stocks as a result of three week highs in the USD index. The latest news on Greece has once again resulted in the re-widening of the Greek/German 10yr bond spread to levels not seen since April and this has consequently had a knock on effect on the European peripherals as fears of contagion spread.

    • Eurozone Construction Output SA (Oct) M/M -0.6% vs. Prev. -1.1% (Rev. to -0.8%)

    • Eurozone Construction Output WDA (Oct) Y/Y -7.7% vs. Prev. -8.0% (Rev. to -8.1%) (BBG)

    Maturity251030Bund (Mar10)
    Level1.1492.1653.1403.902123.42
    Change (bps)-5.561-6.317-5.426-3.7490.64


    Gilts:

    The main move in gilt futures came on the back of exceedingly weak UK retail sales for November prompting prices to rise 20 ticks on the headline.

    • UK Retail Sales (Nov) M/M -0.3% vs. Exp. 0.5% (Prev. 0.4%, Rev. to 0.6%)

    • UK Retail Sales (Nov) Y/Y 3.1% vs. Exp. 3.7% (Prev. 3.4%, Rev. to 3.7%) (BBG)

    UK inflation expectations for year ahead steady at 2.4% in November, same as August, according to the BOE’s quarterly inflation attitude survey. (RTRS)
    • UK CBI Distributive Trades (Dec) M/M 13 vs. Prev. 13 (BBG)

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