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Thursday, May 17, 2012
Tuesday, May 8, 2012
Monday, November 7, 2011
US Consumer Credit: Headline strengthens, details more mixed
US Consumer Credit increased USD 7.386 bln, exceeding expectations of a USD 5,150 bln rise over the month of September. Though the prior month's USD 9.682 bln fall was revised down a bit, but the fact that this month's number is back in positive territory is "a good thing" (as convicted felon Martha Stewart would say).
However,
However,
Wednesday, November 2, 2011
PAPANDREOU SAYS REFERENDUM POSSIBLY ON DEC. 4 -Wire
The date appears set. Note: IMM Dec Options Expiry on EUR Futures is Dec 9. So, just in time...
Monday, October 31, 2011
Sunday, October 30, 2011
Hawkish Trichet: Draghi over-interpreted on bond buys, says Trichet
RTRS: Draghi over-interpreted on bond buys, says Trichet
FRANKFURT: Sun Oct 30, 2011
Reuters - Markets have over-interpreted comments by incoming European Central Bank chief Mario Draghi on the bank's readiness to go on buying the bonds of troubled euro zone states, outgoing ECB President Jean-Claude Trichet said.In a wide-ranging interview at the end of his eight-year term, Trichet welcomed what he saw as a commitment by euro zone governments at a summit last week to intervene in bond markets via the EFSF rescue fund to fight the bloc's debt crisis.
FRANKFURT: Sun Oct 30, 2011
Reuters - Markets have over-interpreted comments by incoming European Central Bank chief Mario Draghi on the bank's readiness to go on buying the bonds of troubled euro zone states, outgoing ECB President Jean-Claude Trichet said.In a wide-ranging interview at the end of his eight-year term, Trichet welcomed what he saw as a commitment by euro zone governments at a summit last week to intervene in bond markets via the EFSF rescue fund to fight the bloc's debt crisis.
Friday, October 28, 2011
The German High Court Speaks
Thought the European deal reached yesterday was a done deal? Apart from all those pesky details like, where all the money will come from, the German Constitutional Court is not allowing the ink to dry, just yet.
Thursday, October 27, 2011
Data Watch: Thursday
While markets will undoubtedly spend much of their time digesting the Euro-zone 'deal', one eye will remain on the incoming data.
Official doc: the self-congratulations + nitty gritty details...
Can be found here
My personal fave:
My personal fave:
We call on the Eurogroup to finalise the terms and conditions for the implementation of these moalities in November, in the form of guidelines and in line with the draft terms and onditions prepared by the EFSF.
I'm a big 'modalities' fan ...
Wednesday, October 26, 2011
European Leaders Come to an Agreement Putting the Euro on Life Support for Months to Come
The main points of the agreement:
- EFSF to be leveraged 4x - 5x bringing its total firepower to 1.4 trillion
- Banks to take a [voluntary] 50% haircut (estimated to amount to ~100 bln) on their Greek debt holdings.
Apparently, the term 'voluntary' has a different meaning in Euro-speak.
- EU banks will have to raise 147 bln of extra capital
- EFSF to be leveraged 4x - 5x bringing its total firepower to 1.4 trillion
- Banks to take a [voluntary] 50% haircut (estimated to amount to ~100 bln) on their Greek debt holdings.
Apparently, the term 'voluntary' has a different meaning in Euro-speak.
- EU banks will have to raise 147 bln of extra capital
Germans were right to be weary of 'Super Mario'
He hasn't even become president, but Mario Draghi is already making dovish comments:
Morning Data Releases
From the US, we get the Durable Goods Report with -1.0% m/m for headline 'Orders' and a 0.5% m/m rise in non-defence Capital Goods ex-Aircraft. At 10:00, the US is expected to report New Home Sales rising 1.7% m/m to 300k annualized.
After S&P affirmed its 'AAA/A-1+' long and short-term sovereign
credit ratings, as stable, Canada will see the release of its Monetary Policy Report.
After S&P affirmed its 'AAA/A-1+' long and short-term sovereign
credit ratings, as stable, Canada will see the release of its Monetary Policy Report.
Banks Borrow EUR 56.9 bln in 12 Month LTRO
This puts the actual figure below the median of both Bloomberg and Reuters survey results. However, the three month EURIBOR-OIS spread continued to edge up (to 80 bps) and banks continue to deposit evermore cash in the ECB's Deposit Facility (see chart below).
Italy May Hold Early Elections
Italian newspapers have published reports that Italy, the third largest country in the Euro-zone, is poised to hold early elections. With its 10 year benchmark bond hovering just below 6%, making refinancing evermore difficult and painful (despite ongoing BTP bond purchases by the ECB).
Tuesday, October 25, 2011
Stress Measure: European Interbank Lending
One of the simplest ways of gauging the health of a banking system is the terms on which they agree to lend to one another. Though this is not the only (or even the best way) its simplicity makes it popular.
In the case of the Euro-zone (discussed in the prior post) one can simply take the three month EURIBOR fixing rate and subtract the three month OIS (Overnight Index Swap) rate. The wider the spread (or the bigger the difference), the more banks are demanding compensation for the credit risk they perceive in lending to other banks in Euros.
The following chart illustrates how mistrust amongst banks operating in Europe has been increasing in the past few weeks. Notice, however, that we are nowhere near post-Lehman levels. Bank recapitalizations in the Euro area are aimed, in part, on alleviating this mistrust, so banks are willing to lend.
In the case of the Euro-zone (discussed in the prior post) one can simply take the three month EURIBOR fixing rate and subtract the three month OIS (Overnight Index Swap) rate. The wider the spread (or the bigger the difference), the more banks are demanding compensation for the credit risk they perceive in lending to other banks in Euros.
The following chart illustrates how mistrust amongst banks operating in Europe has been increasing in the past few weeks. Notice, however, that we are nowhere near post-Lehman levels. Bank recapitalizations in the Euro area are aimed, in part, on alleviating this mistrust, so banks are willing to lend.
The Other Euro-Zone Event to Keep an Eye on Tomorrow...
The results of the ECB's 3 month and 12 month LTROs (Long-term Refinancing Operations), which it offered today, will be published at 11:15 am CET (03:15 am ET) on Wednesday.
The last time the ECB conducted a 12 month LTRO was in December of 2009. It discontinued them, thereafter, citing an easing in 'financial stress'. At the last ECB meeting, it announced they would be reintroduced given that 'stress' has re-emerged.
In plain English, European banks no longer trust eachother, so they are reluctant to lend to one another (except at ever higher rates). The 12 month LTRO enables banks to borrow from the ECB at the average of its benchmark rate (currently 1.5%) over the term of the loan.
The result will give us an indication of the liquidity squeeze banks are feeling and the degree to which they mistrust one another. The more they borrow, the greater the 'stress'.
How much is a lot? it may be tempting to make a comparison to the last set of 12 month LTROs, however, this time
The last time the ECB conducted a 12 month LTRO was in December of 2009. It discontinued them, thereafter, citing an easing in 'financial stress'. At the last ECB meeting, it announced they would be reintroduced given that 'stress' has re-emerged.
In plain English, European banks no longer trust eachother, so they are reluctant to lend to one another (except at ever higher rates). The 12 month LTRO enables banks to borrow from the ECB at the average of its benchmark rate (currently 1.5%) over the term of the loan.
The result will give us an indication of the liquidity squeeze banks are feeling and the degree to which they mistrust one another. The more they borrow, the greater the 'stress'.
How much is a lot? it may be tempting to make a comparison to the last set of 12 month LTROs, however, this time
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