Is Larry Summers possibly getting the nod as Fed Chief the reason why gold sold off the past two days ? Maybe yes , maybe no ....
http://www.zerohedge.com/news/2013-09-13/white-house-shoots-down-nikkeis-summers-trial-balloon
Submitted by Tyler Durden on 09/13/2013 08:10 -0400
and.....
http://www.zerohedge.com/news/2013-09-13/friday-13th-markets-jolted-news-summers-appointment-coming-early-next-week
Submitted by Tyler Durden on 09/13/2013 07:00 -0400
http://www.zerohedge.com/news/2013-09-13/white-house-shoots-down-nikkeis-summers-trial-balloon
White House Shoots Down Nikkei's Summers Trial Balloon
Earlier today, when we observed the overnight "news" floated by Japan's Nikkei we cautioned that...
and.....
http://www.zerohedge.com/news/2013-09-13/friday-13th-markets-jolted-news-summers-appointment-coming-early-next-week
Friday 13th Markets Jolted By News Summers Appointment Coming As Early As Next Week
- 10 Year Bond
- Bank of England
- Bond
- Bond Volume
- British Pound
- China
- Consumer Confidence
- Copper
- Crude
- European Central Bank
- Eurozone
- Federal Reserve
- Gilts
- Goldman Sachs
- goldman sachs
- Gross Domestic Product
- headlines
- Investment Grade
- Israel
- Japan
- Michigan
- Monetary Policy
- Morgan Stanley
- Newspaper
- Nikkei
- Obamacare
- President Obama
- Price Action
- RANSquawk
- recovery
- Reuters
- Steny Hoyer
- United Kingdom
- University Of Michigan
- Verizon
- Volatility
- White House
Overnight asset classes got a jolt following a report by Nikkei that Obama was moving toward naming Summers the next Fed chairman, citing “several close US sources,” pushing stocks modestly lower in Europe, with bond yields higher. According to the report, Obama is to name Summers as next Fed chairman as early as late next week, after the Federal Open Market Committee meeting. Otherwise, risk is still digesting the news of the confidential Twitter IPO, as it is becoming quite clear that some of the largest names (Hilton also announced yesterday) are seeking to cash out in the public markets. Is this the top?
Profit taking related flows also said to have contributed to the move lower in equities. The fact that the majority of analysts see Summers as having a hawkish stance encouraged further speculation of QE tapering, which consequently supported the greenback and weighed on the commodities complex. In addition to that, constructive talks between US’s Kerry and Russia’s Lavrov prompted markets participants to scale back expectations of a military intervention in Syria which in turn saw front month WTI crude futures move back below the 21DMA line. As a result, oil & gas, as well as basic materials sectors are seen as the worst performing stocks in early trade.
On today's minimal event lineup is the U.Michigan survey reading, as well as the latest Fed's Outright Purchase op. Also of note it is Yom Kippur today which may be reflected in lighter trading volumes stateside as the session progresses.
Overnight news bulletin from RanSquawk and Bloomberg:
- US President Obama is to name Lawrence Summers as the next Chairman of the Federal Reserve, according to sources.
- Syria's Assad has said that he expects Syria to start handing over information on chemical weapons to international groups one month after Damascus joins anti-chemical weapons convention. US's Kerry says he and Lavrov agreed to meet again in NY around September 28th to try to agree date for Geneva 2 conference.
- Treasuries decline overnight after Nikkei reported Obama set to name Summers as Fed chairman; yields lower on the week after well-bid 3/10/30 auctions.
- Democratic Whip Steny Hoyer said Obama has the authority to use military force against Syria without returning to the U.S. Congress for approval
- Japan is considering a reduction in corporate income taxes as part of a stimulus package to cushion the economy from the planned increase in the sales levy, according to three people briefed on the matter
- The U.K. economy is heading for its fastest expansion since the onset of the financial crisis, economists said as they upgraded their forecasts for growth through 2015
- European finance ministers endorsed Slovenia’s quest to shore up its banks and avoid becoming the sixth euro-area country to seek a bailout
- While the EU economy is improving, ECB sees no reason to think about raising interest rates anytime soon, board member Joerg Asmussen tells Bild
- Peer Steinbrueck, the Social Democrat trying to unseat Merkel as German chancellor, drew controversy by giving the finger in the cover photo of a popular magazine, deriding his critics nine days before voters go the ballot box
- Sovereign yields higher, EU peripheral spreads little changed. Asian stocks mostly lower, European stocks and U.S. equity-index futures fall. WTI crude, gold and copper lower
Asian Headlines
The Japanese government have upgraded their economic assessment in September and said the economy is headed towards gradual recovery.
EU & UK Headlines
ECB's Asmussen said rates will not be raised in foreseeable future and that the ECB sees no danger of inflation.
ECB's Noyer said ECB's accommodative monetary policy is appropriate for the Eurozone's economic situation. Noyer also went on to add that the normalisation of Fed's monetary policy is necessary even though it is weighing on some emerging markets.
Eurozone Employment (Q2) Q/Q -0.1% (Prev. -0.5%, Rev. to -0.4%)
Eurozone Employment (Q2) Y/Y -1.0% (Prev. -1.0%)
Eurozone Employment (Q2) Y/Y -1.0% (Prev. -1.0%)
Morgan Stanley raises UK 10yr Gilt yield forecast to 3.70% in Q3 2014. In other UK related commentary, according to the RICS, the Bank of England should limit house price rises to 5% gains per year.
UK Construction Output SA (Jul) M/M 2.2% vs. Exp. 2.1% (Prev. -0.7%, Rev. to -1.1%)
UK Construction Output SA (Jul) Y/Y 2.0% vs. Exp. 1.3% (Prev. 1.9%, Rev. to 2.2%)
According to the ONS, Q2 construction revision has minimal impact on GDP.
UK Construction Output SA (Jul) Y/Y 2.0% vs. Exp. 1.3% (Prev. 1.9%, Rev. to 2.2%)
According to the ONS, Q2 construction revision has minimal impact on GDP.
US Headlines
US President Obama is to name Lawrence Summers as the next Chairman of the Federal Reserve, according to sources. Treasury Undersecretary Brainard will likely be named vice chairman, according to the report. The White House is expected to make an announcement as early as late next week. The article notes that some members of Congress have expressed doubts about putting Summers in charge, which could delay the official announcement.
Equities
Stocks traded lower in Europe, with bond yields higher, following reports citing sources that US President Obama is to name Summers as next Fed chairman as early as late next week, after the Federal Open Market Committee meeting. In addition to that, constructive talks between US’s Kerry and Russia’s Lavrov prompted markets participants to scale back expectations of a military intervention in Syria which in turn saw front month WTI crude futures move back below the 21DMA line. As a result, oil & gas, as well as basic materials sectors are seen as the worst performing stocks in early trade.
There were reports that Twitter confirmed filing for an IPO and Goldman Sachs is said to be a lead underwriter for the Twitter IPO.
FX
USD/JPY trended higher overnight, with the ongoing speculation that the Fed will make an announcement regarding tapering of its QE program next week supporting the price action. Even though the pair is largely flat for the week, USD/JPY 3m R/Rs have fallen to lowest level since late July, however implied vols are only marginally bid.
Firmer USD, which benefited from this morning's reports citing sources that US President Obama is to name Lawrence Summers as the next Chairman of the Federal Reserve, meant that both EUR/USD and GBP/USD traded heavy this morning. The move lower by the majors was also driven by touted profit taking flows, which in turn helped the Greenback edge back towards the 21DMA line.
Commodities
Goldman Sachs commodity research head says gold slide to reappear into 2014 and that commodity outlook quite benign. ANZ sees 2013 avg. gold price at USD 1424 and 2014 at USD 1436, silver in 2013 to avg. USD 24.6 and in 2014 at USD 25.10
Syria's Assad has said that he expects Syria to start handing over information on chemical weapons to international groups one month after Damascus joins anti-chemical weapons convention. Assad also called for Israel to dispose of its WMDs. Later, a spokesman for the UN confirmed that the UN had received documents from Syria's government concerning joining chemical weapons convention.
- US Secretary of State Kerry held talks in Geneva with Russian foreign minister Lavrov about Syria toxic arms plans, which concerned the logistics and process of the Syria proposal and resulted in both sides agreeing on goal of finding a path forward.
China to raise fuel prices tomorrow with Gasoline prices to rise by CNY 90 per tonne and Diesel price by CNY 85 per tonne.
* * *
The full overnight plot from DB's Jim Reid
In terms of markets yesterday saw the seven-day US equity rally pause for breath. Syrian and US debt ceiling-related headlines probably weighed on markets, but it’s fair to say that there was a general sense of weariness after what has been a strong start to September. There was some hint of Syrianrelated caution after Assad said that his government will sign the UN Chemical Weapons treaty but required conditions that include the US ceasing its military threats and that Israel should also sign the same treaty. On the US budget debate, US Democrat and Republic negotiations appear far from reaching a conclusion. Bloomberg is reporting that Republicans are considering using the impending government shutdown as leverage to delay Obamacare health laws, a move which was criticised by Democrat leaders (Politico). 10yr UST yields closed unchanged yesterday at 2.91% but there was a bit of intraday volatility in Treasuries after a much lower than expected US jobless claims number (292k vs 330 expected). The claims data saw 10yr UST yields spike up in the immediate aftermath. But this was retraced minutes later after the US Department of Labor said that two states were missing in the tally due to a technical glitch. Gilts were little changed after the BoE’s Carney reiterated the bank’s forward guidance.
The record-breaking Verizon deal continued to dominate trading flow in Dollar credit markets. According to TRACE data from Bloomberg, Verizon accounted for almost one-third of traded $ corporate bond volume yesterday. Buy vs Sell flows were a little more balanced following the scramble for bonds on Wednesday. Nevertheless, bonds across the new deal continued to tighten in the second day of trading. The new 10 year bond tightened by a further 10bp+ to close almost 50bp tighter than its new issue level. Indeed, investors have enjoyed significant gains across the eight tranche deal. Bloomberg reports that mark-to-market gains on the deal are more than $2.5bn in total for those who were able to get hold of bonds in primary. The Verizon deal ensured that the Telecoms bonds maintained its outperformance versus other sectors yesterday.
The iBoxx $ Domestic Telecommunications index’s spread tightened by 6bp whereas the Utilities, Health Care, Oil & Gas and Industrial sectors were only about 0.3 to 0.5bp tighter. The strong performance of the Verizon deal comes despite EPFR data showing fund outflows of $539m for the Investment Grade asset class during the week to September 11 (EPFR), which is largest outflow in three weeks.
Taking a look at overnight markets, the dollar index is trading 0.2% higher supported by a 2bp rise in 10yr UST yields to 2.93%. The S&P 500’s (-0.34%) performance yesterday is weighing on Asian equities across the board this morning. Declines are being led by mining stocks after yesterday’s 3.2% drop in gold prices – gold’s biggest drop in almost three months. The Hang Seng and Nikkei are both about 0.5% lower. In Japan, the newsflow continues to suggest that the government is working a decision to hike sales taxes. The Abe government is considering lowering the effective corporate tax rate from fiscal 2014 as part of a spending package designed to soften the impact of the consumption tax hike according to the Nikkei.
Looking at today’s calendar, US data flow and the Eurogroup meeting will be the main focus. Starting with the data, markets are expecting a headline gain of 0.5% MoM in retail sales for August and a 0.3% gain ex-auto and gas. The preliminary University of Michigan consumer confidence report will garner some attention as will producer prices. Today’s Eurogroup meeting is expected to discuss Greece’s program. In addition, Reuters is reporting that Eurogroup head Jeroen Dijsselbloem has asked the Slovenian finance minister to report on the situation of two problems banks, citing an article from German newspaper Handelsblatt.
No comments:
Post a Comment