Trading

TradeTheNews.com European Market Update: Russia’s Central Bank continues to narrow its interest rate corridor; Italian Dec consumer confidence slumps to 16-year low

***Economic Data***
- (RU) Russia Central Bank (CBR) cuts Refinancing Rate by 25bps to 8.00% (Not expected) but narrowed its rate corridor. The CBR raised Overnight Deposit by 25bps to 4.00% but left its Overnight Auction-Based Repo unchanged at 5.25%
- (EU) ECB: €6.3B borrowed in overnight loan facility vs. €7.5B prior; €347.0B parked in deposit facility va.. €265.0B prior
- (RU) Russia Narrow Money Supply Narrow w/e Dec 19th: 6.68T v 6.54T prior
- (FR) France Q3 Final Gross Domestic Product Q/Q: 0.3% v 0.4%e; Y/Y: 1.5% v 1.6%e
- (FR) France Nov Producer Prices M/M: 0.4% v 0.0%e; Y/Y: 5.6% v 5.2%e
- (HU) Hungary Oct Final Trade Balance: €490.3M v €497.4M prelim
- (ES) Spain Nov Producer Prices M/M: 0.2% v 0.0% prior; Y/Y: 6.3% v 6.5% prior
- (TT) Taiwan Nov Industrial Production Y/Y: -3.6% v -2.8%e; Commercial Sales Y/Y: -1.0% v +2.6%e
- (AS) Austria Oct Industrial Production M/M: -0.3% v -2.0% prior; Y/Y: 3.0% v 2.7% prior
- (IT) Italy Nov Hourly Wages M/M: 0.0% v 0.2%e; Y/Y: 1.5% v 1.7%e
- (UK) Nov BBA Loans for House Purchase: 34.7K v 35.4Ke
- (UK) Oct Index of Services M/M: -0.7% v -0.1%e; 3M/3M: 0.2% v 0.3%e
- (IT) Italy Dec Consumer Confidence: 91.1 v 95.3e v 96.5 prior; lowest reading since Jan 1995
- (BR) Brazil Dec FGV Consumer Confidence: 119.6 v 119.0 prior
- (BR) Brazil Dec FGV Construction Costs M/M: 0.4% v 0.5%e

Fixed income:
- (IN) India sold total INR120B vs. INR120B indicated in 2018, 2021 and 2030 bonds

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Outgoing ECB member Bini Smaghi commented that he could not see a reason why the ECB could not use quantitative easing if deemed necessary
- Bank deposits with ECB jump higher after 3-year tender operation
- Moody's maintains US Sovereign Credit Rating At Aaa, Outlook Negative

Equities:
FTSE 100 +0.60% at 5488, DAX +0.40% at 5873, CAC-40 +1% at 3103, IBEX-35 +0.90% at 8538, FTSE MIB +0.50% at 15,106, SMI +0.60% at 5871

- European shares traded in positive territory in a thin-volume holiday trading after encouraging US data, namely the lower than expected average jobs claims. Markets remain overshadowed by the Eur ozone crisis even though European news has been sparse.
In M&A news, Wavin [WAVIN.NV] jumped over 19% after Mexichem raised its offer to €10/shr from €9.0/shr.

Speakers:
- The Russian Central Bank surprised the markets and narrowed its rate corridor. The CBR cut the main Refi rate by 25bps to 8.00% while raising the Overnight Deposit Rate by 25bps to 4.00%. The central bank commented that it cut the Refinancing Rate due to lower inflation and risks to economy with the overa;ll decision aimed at controlling money market rates. It noted that inflation was at 6.4% as of Dec 19th with annual inflation seen falling in early 2012. It believed that the early dip in 2012 inflation to be temporary and saw steady consumption and moderate industrial growth. It next rate decision to take place in early February.
- ECB's Stark commented in the German press that his resignation from ECB was meant to 'shake up governments' as Euro zone was on the wrong path and did not understand the importance of budget discipline. Stark added that he believed his own credibility was endangered and his decision to leave the ECB was not tied to any single event. He noted that Europe was exposing itself too much by strengthening IMF. Deflation risks at this time were clearly smaller compared to the months afterward following Lehman Brothers collapsed back in Sept 2008
- Swiss Central Bank (SNB) published its Quarterly Report which reiterates its views on both interest rates and the EUR/CHF cross floor. The SNB would continue to enforce the EUR/CHF floor at 1.2000 and would to take additional measures at any time. It reiterated view to keep interest rates close to zero as possible.
- India Fin Min Mukherjee commented that the economic situation remained difficult but viewed it as a temporary setback. He did note that the prospects are "distant" for a solution to the euro-zone debt crisis. He stated that inflation might be between 6.0-7.0% by end of current fiscal year (March 2012) and reiterated FY12 GDP might be between 7.25-7.75% range. Lastly he believed the RBI's prolonged monetary tightening has hurt economic growth, while high crude oil prices through this year has pressured the government's finances
- Throughout the Asian and European session Moodys commented on numerous sovereign. It maintained current ratings and outlooks for In Europe it commented on Austria, Slovakia, Romania, Denmark and Iceland. In the Americas it commented on Mexico, Argentina, Chile and Canada. Lastly in the Asia/Pacific region it commented on New Zealand
- Moody's disclosures its stance of the credit ratings of Government of United States of America and maintained its AAA sovereign rating; Negative Outlook
- Moody's cuts Slovenia sovereign rating one notch to A1 from AA3; Outlook Negative
- Pakistan Army Chief: Any perception that military plans a takeover is misleading; army is committed to democracy
- China said to have invited new North Korean leader Kim Jong Un to visit the country
- Hungary Central Bank announced 1-week FX swap tender for banks to help year-end position squaring. It stated that this FX tender would a one-off event

Currencies:
- The price action in FX remained subdued ahead of the Christmas holiday break and locked within established ranges
- The GBP/USD was off its best levels following soft economic data and tested its session lows below 1.5680 ahead of the NY morning.
- The EUR/USD was steady at 1.3080 area while USD/JPY was holding just above the 78.00 level.
- The CHF currency was little changed after the SNB just reiterated its stance on both interest rates and the floor in the EUR/CHF cross. EUR/CHF was at 1.2230 ahead of the NY morning.

Political/ In the Papers:
- Italian banks are said to be close to fulfilling approximately half of their 2012 funding requirements. The €116 billion borrowed by Italian banks from the ECB's 3-year loan operation helped move these institutions closer to their funding targets.
- The Times reported North Sea gas production declined by a record 29% due to the government windfall tax. This leaves Britain more exposed to expensive imports. Analysts have noted this is the biggest YoY quarterly decline since records began in 1996, and higher than official forecasts. The article also added third quarter oil production has been much lower. According to the Dept of Energy and Climate Change, including natural gas liquids, production declined by 22.7% y/y (the largest decline since records began in 1995).
- Amid the EU debt crisis, a rising number of citizens of peripheral EU countries are migrating to Germany. In the Telegraph report, during the first half of 2011, Spanish migration to Germany rose by nearly 50%. Also during the same time period, Greek migration to Germany rose by more than 80%.
- British household incomes are expected to hit a 34-year low. The ONS noted that real household disposable income declined by 1.9% YoY for the first nine months of the year. Households have not suffered more since 1977 when the annual decline was 2.1%.

***Looking Ahead***
- 8:30 (US) Nov Durable Goods Orders: 2.2%e v -0.5% prior (revised from-0.7%); Durables Ex Transportation: 0.4%e v 1.1% prior (revised from 0.7%)
- 8:30 (US) Nov Personal Income: 0.2%e v 0.4% prior; Personal Spending: 0.2%e v 0.1% prior
- 8:30 (US) Nov PCE Core M/M: 0.1%e v 0.1% prior; Y/Y: 1.7%e v 1.7% prior; PCE Deflator: 2.7%e v 2.7% prior
- 8:30 (CA) Canada Oct Gross Domestic Product M/M: 0.1%e v 0.2% prior
- 9:00 (MX) Mexico Nov Preliminary Trade Balance: -$475M v -$466M prior
- 9:30 (EU) ECB calls for bids in 7-day Main Refi Tender
- 9:30 (EU) ECB weekly settlements in gov't bond buying program
-10:00 (US) Nov New Home Sales: 313Ke v 307K prior

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TradeTheNews.com Asian Market Update: Moody’s Affirms US rating while the Congress reaches an agreement on payroll extension; Singapore data disappoints

***Economic Data***
- (SG) SINGAPORE NOV CPI M/M: 0.6% V 0.3%E; Y/Y: 5.7% V 5.3%E
- (SG) SINGAPORE NOV INDUSTRIAL PRODUCTION M/M: -25.2% V -9.0%E; Y/Y: -9.6% V +12.2%E
- (NZ) NEW ZEALAND NOV MONEY SUPPLY M3 Y/Y: 6.5% V 5.5% PRIOR
- (VN) VIETNAM DEC CPI M/M: 0.5% V 0.4% PRIOR; Y/Y: 18.1% V 19.8% PRIOR

***Markets Snapshot (as of 04:30GMT)***
- Nikkei225 -0.8%
- S&P/ASX +1.4%
- Kospi +1.3%
- Taiwan Taiex +2.2%
- Singapore Straits Times +0.4%
- Shanghai Composite +1.5%
- Hang Seng +1.1%
- S&P Futures +0.5% at 1,255
- Feb Gold +0.2% at $1,613/oz
- March Crude +0.4% at $99.92

***Overview/Top Headlines***
- Asian markets gift to the globe was a rally heading into the weekend. Most markets were up over 1%. With a return of risk appetite the USD weakened against the majors but by no more than 30 pips. NZD/USD lost about 20 pips when a fresh 5.8 earthquake hit Christchurch, New Zealand (the same location as the previous devastating one). Corn and wheat futures both lost ground while silver and copper gained nearly 0.9%. After the close House Speaker Boehner (R-OH) said he had reached an agreement with Senate Majority Leader Reid (D-NV) on two month payroll tax cut extension; Congress will be asked to pass a revised version of the short term extension before Christmas. To begin talks on a one year payroll tax cut extension after the holiday break. Conference committee will also work on a two year "Doc fix." Moody's affirmed the US's sovereign AAA rating but assigned a negative outlook. Without further deficit reduction measures, the rating could be placed on review for downgrade sometime in the coming year or two.

- China Securities Regulatory Commission (CSRC) has granted the first group of QFII licenses to 19 firms under trial program. Chinese press reported that China DEC new yuan loans may come in at CNY550-600B v CNY562B in Nov. The property market in Asia continues to show signs of slowing. According to Centaline sales of land in Beijing, Shanghai and Guangshou have fallen. In Taiwan new housing projects in have fallen to a 10-year low.

- Gloucester Coal and Yanzhou Coal reached an A$6.0B merger agreement. Deal is conditional on getting an ASX listing for Yanzhou Australian assets. Gloucester's major shareholder, Noble Group, expects a gain of $200M from Gloucester divestment and fully supports the deal. Yanzhou said it was planning to raise output to 25M tons per year by 2016; Will take steps to cut operating costs and build on margins. The combined companies will create the 9th largest in the world.

***Reminder: Coverage will be limited on Monday the 26th due to the Christmas holiday.***

***Speakers/Geopolitical/In the press***
- (NZ) According to economists from ANZ and other banks, RBNZ is not likely to start tightening policy rates from the current 2.5% until H2 of 2012 - Dominion Post
- (CN) China sovereign wealth fund (CIC) expected to receive $50B capital injection - financial press
- (CN) HSBC estimates China 2012 GDP to slow to 8.6% before rising to 8.8% in 2013; Down from 8.9% GDP expected for 2011 - China Daily
- (KR) Fitch: Could upgrade South Korea's sovereign rating within 1-2 years
- (RU) Russian ambassador to China: Expects 2011 trade with China to be $78B - China Daily
- USD/KRW: (KR) South Korea Govt and Bank of Korea (BoK) agree to take steps to reduce currency volatility

***Equities***
- TM: Exec: Expects Thailand operations to resume normal operations by mid-Jan (slightly behind schedule) - Financial press
- China Airlines, 2610.TT: Issues 568M shares at NT$11.73/shr (approx 12% of shares outstanding)
- Quanta Computer, 2382.TT: May see a 20% m/m decline in shipments of notebooks in Dec - DigiTimes
- UGL.AU: Railcorp renews maintenance contract worth A$1.4B over 7-year term

- QCOM: Sale of airwaves to AT&T for $1.9B has been approved by US regulators - financial press; +0.2% after hours

***FX/Fixed Income/Commodities***
- (CN) China Commerce Ministry will look to improve logistical infrastructure between farms and supermarkets to stabilize food prices - China Daily
- (CN) China's Shandong province plans to build 6-8 reserve facilities for coal by 2015 - Chinese press
- (CN) China and Thailand have signed a currency swap agreement
- GLD: SPDR Gold Trust ETF daily holdings fall by 9.1 tons to 1,258.8 tons (lowest since 1,255.7 on Nov 7th); 2nd session of decline
- (US) NY Fed reports new swap facility at $9.89B with foreign central banks

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Bilateral Trade in Goods by Industry and End-use Category

The STAN Bilateral Trade Database by Industry and End-use category provides values of exports and imports of goods for OECD countries and non member economies. Data are presented by partner country, by industry and by end-use category from 1995 onwards.