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US Morning Briefing

Wed, Dec 23 2009, 12:17 GMT
by RANsquawk Research Team

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Overnight News

Asia:

Japanese markets closed today for a market holiday

US

In a light session, t-notes ticked lower overnight as investors eyed the re-funding announcement from the US Treasury later today. However, touted Asian central bank buying during early European trade saw t-notes reverse and pare back some of those losses.

  • US MBA Mortgage Applications (Dec 18) W/W -10.7% (Prev. -0.1%)

  • US ABC Consumer Confidence (Dec 20) W/W -42 (Prev. -45) (BBG)

US Treasury’s Geithner expressed confidence that the US economy was on a solid recovery path, but said tight lending practices by banks still pose a risk. (RTRS) The Treasury Department is planning to offer banks about USD 30bln in federal aid for a mix of programs to support lending to small businesses.(Washington Post)

Treasury in grip of Fannie Mae and Freddie Mac: the Sequel wrote the FT today with Fannie and Freddie having already drawn USD 112bln between them. Barclays Capital estimates Fannie will ultimately need USD 130bln and Freddie USD 100bln.But in a stress scenario Fannie would need about USD 180bln-close to the USD 200bln limit.


Bonds

EUROPEAN GOVERNMENT BONDS

Bund futures opened lower following overnight losses in t-notes but have since traded sideways, with only 100,000 contracts traded. In a wake of yesterday’s move by Moody’s to downgrade Greece debt to A2 from A1, which was less than most feared, meant that the Greek/German 10y yield spread continued to tighten today.

  • German Import Price Index (Nov) M/M 0.4% vs. Exp. 0.3% (Prev. 0.5%)

  • French Consumer Spending (Nov) M/M -0.1% vs. Exp. 0.5% (Prev. 1.1%, Rev. to 1.0%)

  • Italian Consumer Confidence Index SA (Dec) M/M 113.7 vs. Exp. 112.7 (Prev. 112.8) (BBG)

    Maturity251030Bund (Mar10)
    Level1.1852.2853.2954.021122.05
    Change (bps)0.2432.5673.4203.420-0.31


    Gilts:

    Gilts on NYSE LIFFE trended lower today after the minutes from the BoE meeting revealed that the members did not discuss an extension to the asset purchase program, which conflicted with the Daily Mail report that suggested otherwise. The paper reported, without quoting sources, that the BoE was thought to be leaning towards expanding the scheme by up to GBP 30bln in the New Year.

    BOE MPC voted 9-0 to keep rates and QE unchanged. Miles, Dale said its better to complete purchases as planned and that full impact of APF may be felt only with a lag. (BBG)

    UK BBA Loans for House Purchases (Nov) M/M 44713 vs. Exp. 43000 (Prev. 42238, Rev. to 42552) (BBG)

        Maturity2.0005.00010.00030.000Gilt (Mar10)
        Level1.2972.7573.9684.406114.65
        Change (bps)6.6247.1376.2775.447-0.6


        Equities

        Equities gained on the back on thin volumes and positive sentiment which carried out from yesterday’s session despite a downward revision to US Q3 GDP. Ahead of raft of economic data releases from the US, stocks were led by the financials and the basic materials sector. Investors will be looking for further imporvement in the housing market, as well as upward revision to U. Michigan survey. In other noted news, S&P said that the number of companies at great risk of succumbing to their debts had the steepest one-month fall in five years in November. However this was largely ignored by the market participants.

        IndexDAXCACFTSEEUROSTOXXSMI
        Level5972.073924.625376.822964.816599.69
        Change (ticks)26.3826.2448.1619.1016.79


        FX

        Canada fin. Min says concerned when sees CAD volatility and says there are limited tools to contain CAD rise. (RTRS)

        Latvia’s prime minister has warned Swedish banks they risk choking off recovery in the Baltic state’s crisis-hit economy unless they resume lending. (FT)

        CurrencyEURUSDGBPUSDUSDJPY
        Level1.42561.595091.79
        Change (pips)0.0007-0.0015-0.0465


        Commodities

        Heading into the North American open, WTI crude futures are trading higher after yesterday’s API report showed a large drawdown in US crude and gasoline stockpiles.

        • Iran will start enriching uranium to a level of 20% if the West maintains its refusal to sell the country nuclear fuel, according to Parliament speaker Ali Larijani.

        • DOE US Crude Oil Inventories (Dec 18) W/W Exp. -1600K vs. Prev. -3689K (Range High 3000K, Low - 3500K)

        • DOE US Gasoline Inventories (Dec 18) W/W Exp. 1000K vs. Prev. 879K (Range High 2500K, Low - 1500K)

        • DOE US Distillate Inventory (Dec 18) W/W Exp. -2000K vs. Prev. -2954K (Range High -400K, Low - 3620K)

        • DOE US Refinery Utilisation (Dec 18) W/W Exp. 0.40% vs. Prev. -1.10% (Range High 1.10%, Low - 0.50%)

        • The latest Weather Derivatives forecast sees temperatures for the next 6-10 days in the US to be 3.1F below the average for this time of year, with colder temperatures seen in the north-central, the southcentral and the south-east regions. The National Hurricane Centre (NHC) reports that there are no tropical cyclones at this time.

        CommodityWTI NymexOTC Spot Gold
        Level74.611083.83
        Change (USD)0.21-0.17


        Looking ahead

        Economic Releases

        CSTGMTEXPPREV
        7301330USPersonal Income M/M (Nov)0.50%0.20%
        7301330USPersonal Spending M/M (Nov)0.70%0.70%
        7301330USPCE Deflator Y/Y (Nov)1.60%0.20%
        7301330USPCE Core M/M (Nov)0.10%0.20%
        7301330USPCE Core Y/Y (Nov)1.50%1.40%
        7301330CAGDP M/M (Oct)0.30%0.40%
        9001500USU. Michigan Confid. M/M (Dec F)73.873.4
        9001500USNew Home Sales M/M (Nov)438K430K
        9001500USNew Home Sales M/M (Nov)1.70%6.20%
        9301530USDOE Crude Oil Invent. W/W (Dec 18)-1725K-3689K
        9301530USDOE US Gasoline Invent. W/W (Dec 18)1000K879K
        9301530USDOE US Distillate Invent. W/W (Dec 18)-2000K-2954K
        9301530USDOE US Heat Oil Invent. W/W (Dec 18)-2270K
        9301530USDOE US Refinery Utilizat. W/W (Dec 18)0.45%-1.10%
        9301530USDOE Cush. OK Crude Invent. W/W (Dec 18)782K
        17502350JNBoJ Monet. Policy Meeting Minutes M/M (Dec)


        Auctions
        10001600US2y, 5y and 7y Note Re-Fund. Announcement


        Speakers
        N/A

        **Prices taken at 12.04 GMT

        Published on  Wed, Dec 23 2009, 12:37 GMT


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