http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_07/03/2013_486292
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_07/03/2013_486237
http://ransquawk.com/headlines/in-reaction-to-the-ecb-draghi-comment-that-sees-upside-inflation-risks-from-taxes-and-oil-prices-eur-usd-trades-at-session-highs-of-1-3066-after-a-volatile-start-to-the-press-conference-07-03-2013
http://www.zerohedge.com/news/2013-03-07/ecb-keeps-rates-unchanged
and.....
http://www.zerohedge.com/news/2013-03-07/futures-ignore-13-year-high-french-unemployment-tumble-german-factor-oders-rise-span
http://www.telegraph.co.uk/finance/financialcrisis/9913837/Italys-Bersani-on-collision-course-with-Germany-and-ECB-over-austerity.html
and.......
http://www.guardian.co.uk/business/2013/mar/07/eurozone-crisis-bank-of-england-qe-ecb
PASOK will not back fresh fiscal measures, Venizelos tells troika officials
In a meeting with troika officials in Athens Thursday, Evangelos Venizelos said if the targets of the Greek program are not met, then growth-inducing measures should be introduced instead. The socialist leader also presented a 1 billion-euro plan to deal with rampant unemployment in the debt-wracked country. The program could be financed with European Union structural funds, Venizelos said. Greece's jobless rate fell in December for the first time since a crippling recession began five years ago, official figures showed Thursday. |
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_07/03/2013_486237
Greek unemployment rate reached 26.4 pct in December
Greece’s unemployment rate in December 2012 reached 26.4 percent, according to data published by the Hellenic Statistical Authority (ELSTAT).
December’s jobless figures represent a 5-percentage point rise from a year earlier and a 0.2 percent drop from November 2012.
The number of employed people increased by some 40,000 between November and December last year.
The total number of employed amounted to 3,679,074 people, the unemployed came to 1,321,236. The number of inactive people stood at 3,341,863.
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_07/03/2013_486155
|
http://ransquawk.com/headlines/in-reaction-to-the-ecb-draghi-comment-that-sees-upside-inflation-risks-from-taxes-and-oil-prices-eur-usd-trades-at-session-highs-of-1-3066-after-a-volatile-start-to-the-press-conference-07-03-2013
News Headline Summary
In reaction to the ECB Draghi comment that sees "upside inflation risks from taxes and oil prices" EUR/USD trades at session highs of 1.3066 after a volatile start to the press conference
- Press conference continues and is currently in the Q&A.
Update details:
- Other notable comments have been that Draghi sees the LTRO repayments as reflecting improvement in the financial markets confidence.
- Secondly, the cut to growth forecasts was largely expected but the small change in inflation forecasts is surprising as the market was expecting modest downward revisions today.
- Heading into this particular months decision many were looking for this conference to carry a dovish tone but that has not been the case thus far.
- As such EUR/USD trades up at session highs with the Euribor strip and bund future coming under pressure as participants reprice any near term reduction in interest rates.
- Secondly, the cut to growth forecasts was largely expected but the small change in inflation forecasts is surprising as the market was expecting modest downward revisions today.
- Heading into this particular months decision many were looking for this conference to carry a dovish tone but that has not been the case thus far.
- As such EUR/USD trades up at session highs with the Euribor strip and bund future coming under pressure as participants reprice any near term reduction in interest rates.
RANsquawk
13:43 - Market Analysis - Source: http://www.zerohedge.com/news/2013-03-07/ecb-keeps-rates-unchanged
ECB Keeps Rates Unchanged
Submitted by Tyler Durden on 03/07/2013 07:47 -0500
As was largely expected by the sell-side, the ECB kas kept all three key rates unchanged, just like the BOE 45 minutes earlier. From the ECB:
At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.75%, 1.50% and 0.00% respectively.The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today.
It is expected that Draghi will tone down his expectations at the press conference in 45 minutes, although what actual steps he will take as opposed to just talking even more, is unclear. As for JPM, which was alone among those calling for a rate cut, it will promptly pull reality's margin and bankrupt the real world, leading to a new, better one, in which JPM is the only surviving entity, allowing the bank to buy and sell any assets it wishes to/from itself, in the process sending the DJIA to that much desired 100,000E10, even as gas/oil prices tumble to negative.
and.....
http://www.zerohedge.com/news/2013-03-07/futures-ignore-13-year-high-french-unemployment-tumble-german-factor-oders-rise-span
Futures Ignore 13 Year High In French Unemployment, Tumble In German Factor Orders; Rise On Spanish Auction
Submitted by Tyler Durden on 03/07/2013 06:55 -0500
- Bank of England
- Bank of Japan
- Beige Book
- BOE
- Bond
- Consumer Credit
- European Central Bank
- Eurozone
- Fisher
- fixed
- France
- Germany
- headlines
- Italy
- Japan
- Jim Reid
- LTRO
- Nikkei
- Portugal
- ratings
- Reality
- Recession
- Reuters
- Trade Deficit
- Unemployment
- United Kingdom
- Yen
In today's overnight trading, it was all about Europe (and will be with today's BOE and ECB announcements), where things continue as they have for the past six months: when it is a problem that can be "solved" by throwing bucketloads of money, and/or guaranteeing all risk, things appear to be better, such as today's EUR5.03 billion Spanish bond auction (the 0.03 billion part being quite critical as otherwise how will the authorities indicate the pent up demand by the Spanish retirement fund and various other insolvent ECB-backstopped Spanish banks for Spanish debt), in which Spain sold EUR569MM in 2015 bonds (2.632% yield compared to 2.713% on Jan 17), EUR2.03 bn in 2018 bonds (3.572% yield vs 4.123% on Feb. 3), and EUR 2.44 bn in 2023 bonds (4.917% vs 5.202% in Feb. 21). And while events that can be "fixed" with massive liquidity injections are doing better, those other events which rely on reality, and the transfer of liquidity into the real economy, are just getting worse and worse. Sure enough, today we also learned that French unemployment rate just hit a 13 year high.
From Reuters:
"The rise to 10.6 percent is the sixth consecutive quarterly increase in the jobless rate in the French economy, which contracted 0.3 percent in the final three months of 2012. It brings unemployment to its highest since the second quarter of 1999 and is the latest bad news for a government that has admitted it will fall far short of growth and public deficit targets this year. Other data published on Thursday showed a widening trade deficit."It is an uncomfortable truth for (President) François Hollande and another sign that France may be joining the wrong side of the euro zone team," said Julien Manceaux, economist at ING Financial Markets, forecasting that unemployment would climb as high as 11.5 percent this year."
The dramatic split in the Eurozone core is best seen on the following chart courtesy of Dick Darlington:
It wasn't only the French economy that continued to slide into recession: Germany wasn't immune either following "surprising" news that German January Factory Orders tumbled -1.9% M/M on expectations of a 0.6% rise, down from a revised 1.1% in December. The great equalization in Europe continues, as the PIIGS, kept still on artificial life support do everything in their power to drag down the core.
The one thing, however, that will not change no matter the actual reality, are US futures, which like any other day, have ramped to overnight session highs on, what else: central bank "conviction buy" ratings for the S&P and price targets in the 2000 range.
At last check, key European markets were trading as follows:
- Spanish 10Y yield down 5bps to 4.95%
- Italian 10Y yield down 5bps to 4.61%
- U.K. 10Y yield down 1bps to 1.95%
- German 10Y yield steady at 1.46%
- Bund future down 0.04% to 145.06
- BTP future up 0.49% to 110.75
- Euro up 0.48% to $1.3029
- Dollar Index down 0.14% to 82.35
- Sterling spot down 0.14% to $1.4997
- 1Yr euro cross currency basis swap unchanged at -21bps
- Stoxx 600 up 0.2% to 293.97
And the key headlines via BBG:
- Draghi Confronts Italy Impact as ECB Seen Holding Rates
- DBRS Downgrades Republic of Italy to A (low), Negative Trend
- Euro Strengthens, Spain Bonds Gain Before ECB; Dow Futures Rise
- Bersani Clings to Premiership Goal as Allies Predict Failure
- Italy Govt Led by Non-Politician Looms
- Portugal Rating Outlook Raised to Stable by S&P on Budget Plan
- Portugal 5Y Yield Drops to Lowest Since Dec. 2010
Aside from the above, DB's Jim Reid recaps everything else "you need to know":
We've arrived at the business end of the week with today's central bank policy meetings, Draghi's press conference and tomorrow's US payroll report set to take much of the spotlight. Overnight the Bank of Japan has kicked things off by rejecting a proposal for an immediate start to open-ended asset purchases (currently scheduled for a 2014 start). They voted to leave their asset purchase fund at JPY76trn and the policy rate target of 0 to 0.1% unchanged. Another board member, Ryuzo Miyao, also proposed that the bank keep its policy rate at the current level until its 2% inflation target is in sight. Both proposals were voted down 8 votes to 1. In Governor Shirakawa's final meeting before he steps down later this month, the BoJ raised its economic assessment, saying that the economy has "stopped weakening". Attention will now turn to the BoJ's meeting next month which will likely be chaired by Haruhiko Kuroda and two new deputies.
The market reaction has been relatively minimal reflecting the broad expectation that the BoJ would stay put today - the yen is trading marginally higher against the greenback (+0.1%) following the BoJ announcement and the Nikkei (+0.3%) has
pared earlier gains.
pared earlier gains.
Turning to today's ECB meeting, the market consensus is for rates to remain unchanged. DB's Mark Wall and Gilles Moec think that the risk is tilted more in the direction of easing of policy, but not in the form of standard interest rate policy. Rather, they think an easing of non-standard, 'credit-easing' liquidity policies is more likely within the next few months. Since last month, certain financial conditions have eased including the EUR which is off its highs and also a second wave of LTRO repayments which were lower than forecast. The expectation is for Draghi to maintain a cautious tone in his post-meeting press conference.
Across the Channel, DB's Chief UK Economist expects no change in policy from the BoE today (as does Bloomberg consensus) but he underscores that the risks to this view are high. The BoE minutes from the February meeting showed that three of the nine-strong MPC Committee - including the Governor himself - voted for additional asset purchases meaning just two other MPC members are needed to join Messrs King, Fisher & Miles for further QE to be sanctioned.
Interestingly the FT is carrying a story this morning suggesting that the UK budget (March 20th) will include the Chancellor overhauling the BoE remit. The paper suggests that a move to a FED style dual mandate or some kind of nominal economy target rather than just an inflation one might be being considered. This might excite the pound bears again after a few days of stability. Central banking is seemingly changing and is slowly becoming less independent around the world.
Returning to yesterday's markets, the Dow (+0.3%) closed at a new high for the second day in a row while the S&P500 (+0.11%) inched ever closer to reaching its October 2007 record of 1565.15. Earlier in the day, comments from the Philly Fed's Charles Plosser (non-voter) that the Fed should end asset purchases before year-end weighed on equities towards the end of the European session. Indeed, the Stoxx600 sold off more than half a percent from the early highs to finish 0.25% lower on the day.
In that context, European credit indices had a relatively good day with Crossover and Europe Main managing to close 5.5bp and 1bp tighter at 431bp and 111.5bp respectively on decent volume; while the clear outperformer was the subordinated financials index which closed 12bp firmer (248bp).
In terms of data, the February ADP employment report showed a +198k gain in private payrolls (vs +170k expected) after the prior month was revised up +23k (to 215k). Following the ADP report, DB's Joe LaVorgna has raised his forecast for this Friday's payrolls to +180k from +125k previously and expects a two-tenths decline in the unemployment rate (to 7.7%).
In other data, US factory orders for the month of January were down 2%mom (vs -2.2% expected) weighed down by decreases in military hardware and commercial aircraft orders. The tone in the Fed's Beige Book was little changed with economic activity described as having "generally expanded at a modest to moderate pace".
Turning briefly to overnight markets, risk sentiment has been relatively mixed outside of the Japanese markets. The Hang Seng (-0.3%) and Shanghai Composite (+-0.8%) are mostly in consolidation mode following the solid gains over the last two days. The KOSPI (-0.9%) and ASX200 (-0.15%) are also lower, the latter weighed by a wider than expected Australian trade deficit for January (-$1.057bn vs -$500m expected).
In other overnight news, S&P revised Portugal's BB rating outlook to stable from negative. The rationale was that S&P expects Portugal's official European lenders to lengthen the maturity profiles of their loans which will reduce Portugal's public sector refinancing risks. They also expect the troika to adjust Portugal's fiscal consolidation path to allow for weaker-than-previously-assumed economic performance which should make the adjustment process "more sustainable".
Turning to the day ahead, German factory orders and trade data for France are the main data releases in Europe. In the US, the January trade report, jobless claims and consumer credit are main highlights on the data docket. But the focus will be on the BoE announcement at midday London time, followed by the ECB's announcement at 12:45pm (London) and Draghi's press conference at 1:30pm.
http://www.telegraph.co.uk/finance/financialcrisis/9913837/Italys-Bersani-on-collision-course-with-Germany-and-ECB-over-austerity.html
“We must leave the austerity cage,” he told leaders of his Democrat Party (Pd), responding to Italy’s electoral earthquake by tearing up his pre-election programme.
“A change of course is absolutely necessary given that five years of austerity and attacks on workers have pushed up public debt levels across Europe,” he said.
“The vicious circle between belt-tightening and recession is putting representative government at risk and making it impossible to govern. The immediate emergency is the real economy and joblessness,” he said.
The pledge puts Mr Bersani on a collision course with the ECB, which is constrained from helping to shore up the Italian bond market unless Rome complies with Europe’s austerity agenda.
“Italian voters may have effectively voted away the ECB safety net,” said Christian Schulz from Berenberg Bank. The central bank cannot activate its bond purchase programme (OMT) unless Italy requests a rescue from the EMU bail-out fund, and that in turn requires a vote in Germany’s Bundestag.
and.......
http://www.guardian.co.uk/business/2013/mar/07/eurozone-crisis-bank-of-england-qe-ecb
Bank of England: No change
BREAKING: The Bank of England has voted to leave its quantitative easing budget unchanged at £375bn.
Interest rates remain at their record low of 0.5%
S&P raises Portugal's rating outlook
Standard & Poor's has just revised UP its outlook on Portugal, from negative to stable.
It issued the vote of confidence after concluding that Portugal is likely to persuade its lenders to give it more time to pay its bailout loans.
Here's S&P's logic:
• We expect Portugal's official European lenders to lengthen the maturity profiles of their loans to Portugal. In our view, this should reduce Portugal's public sector refinancing risks.• We also expect the "Troika" to adjust Portugal's fiscal consolidation path to allow for weaker-than-previously-assumed economic performance. In our opinion, this makes Portugal's adjustment process more sustainable, both economically and socially, and reduces the risk that it will not comply with the program.• We are therefore revising our outlook on the rating on Portugal to stable from negative.
This leaves Portugal with a junk rating of BB, though (two notches below investment grade).
Greek unemployment rate falls
Greece's unemployment rate has actually fallen, for the first time since the company's economic downturn began five years ago.
In what could be a much-needed encouraging sign, the country's jobless rate dropped to 26.4% in December, from 26.6% in November.
It appears that Greek companies may have been encouraged to take on more workers as the long saga of Greece €34bn aid tranche was finally resolved at the end of 2012.
It's only a glimmer of hope, at best – Greece still has the highest jobless rate in the eurozone (ahead of Spain's 26.2%), and it's economy is still shrinking.
Berlusconi sentenced to jail (but not jailed) over wiretap charges
Speaking of Silvio Berlusconi … he's just been sentenced to a year's imprisonment following a trial for leaking the contents of a wiretapped phone call to his brother's newspaper.
Berlusconi had denied pushing Il Giornale to publish the transcript of the call to damage a political opponent, but the court has just issued its ruling.
However, the handcuffs are not coming out. Berlusconi can't actually be jailed until the appeal's process has been concluded – so this doesn't appear to have a major impact on the political situation in Italy.
French finance minister issues austerity warning
France's finance minister has warned of a social crisis and a surge in popularity for extremist political groups unless Europe ends its focus on austerity and fiscal cuts.
Speaking in Brussels this morning, Pierre Moscovici said continuing on the current course would ultimately "nourish a social crisis that leads to populism". His solution – "more Europe" – with closer ties between its members to help each other back to growth.
He argued that the "existential" eurozone crisis is over (ie, the risk of the euro breaking up), but a crisis remains with the single currency region.
Moscovici conceded that countries couldn't simply ignore their debt levels, saying that national debts were "a challenge for any country" regardless of their situation. But he argued that measures such as eurobonds, and a new fund to tackle Europe's jobless crisis, would be a much better approach.
France isn't expected to hit the EU's target of a deficit no bigger than 3% of GDP this year. But with French unemployment over 10%, the view in Paris is that growth is more important then debt levels.
Moscovici was speaking at a conference called Failed austerity in Europe – the way out (so I don't expect he was heckled!).
Good morning, and welcome to our rolling coverage of the latest developments in the eurozone financial crisis and across the global economy.
It's a big day for central banking, with the Bank of England and theEuropean Central Bank holding their monthly meetings to debate monetary policy and set interest rates.
Both meetings promise to be really rather interesting.
In the Bank of England's case, there's a real chance that the Monetary Policy Committee (MPC) will vote to pump another dose of electronic money into the system through its quantitative easing programme.
Last month the MPC was split 6-3 over QE - so can the three doves (which including governor Sir Mervyn King) persuade at least two more colleagues over to their perch?
The ECB isn't expected to cut its interest rates (but, as with the BoE, you never know).
The excitement could come Mario Draghi holds his press conference this afternoon. Expect a grilling on the situation in Italy -- where the political deadlock has raised questions over the effectiveness of Draghi's pledge to buy unlimited government bonds if a country seeks help.
How, reporters in Frankfurt will doubtless ask, could the ECB take the risk of loading itself up with, par exemple, Italian debt when a maverick like Beppe Grillo is calling the shots? Not to mention Silvio Berlusconi....
That Outright Monetary Transactions (OMT) programme isn't full-blown QE, but it's the best weapon in the ECB's locker to control, tame and fix the crisis.
Draghi's comments will also be scrutinised for signs that the ECB might cut interest rates in the coming months -- which would bring some relief to struggling firms and households across the eurozone.
Timings:
Bank of England rate/QE decision: noon GMT
European Central Bank rate decision: 12.45pm GMT
European Central Bank press conference: 1.30pm GMT
.......
We'll also be tracking other events across the eurozone and the wider economy. That will include the situation in Greece, where Troika officials continue their latest visit to Athens to check the country's progress against its bailout targets.