EU Market Update: BOE FPC report to bring added importance as it could address housing concerns



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Article content EU Market Update: BOE FPC report to bring added importance as it could address housing concerns

26.06.2014 11:54 Thursday
- Risk appetite remains intact as US recovery has further to go before the Fed will raise interest rates.
- EU Leader Summit Draft: To support 'growth-friendly' measures
- Market awaits to see if BOE takes action to cool UK housing market

***Key Economic Data in session***
- (FR) France Jun Consumer Confidence: 86 v 85e
- (TW) Taiwan Central Bank (CBC) Interest Rate left its Benchmark Interest Rate unchanged at 1.875% (12th straight pause)
- (HK) Hong Kong May Trade Balance (HKD): -42.4B v -50.5Be; Exports Y/Y: +4.9% v +1.6%e; Imports Y/Y: +3.7% v +2.8%e

Fixed Income:
- (IT) Italy Debt Agency (Tesoro) sold €7.5B vs. €7.5B indicated in 6-month Bills; Avg Yield: 0.309% (record low) v 0.492% prior; Bid-to-cover: 1.73x v 1.7x prior

Indices [Stoxx50 flat, FTSE 100 flat at 6,731, DAX flat at 9,863, CAC-40 flat 4,462, IBEX-35 +0.1% at 10,979, FTSE MIB flat at 21,469, SMI -0.2% at 8,562, S&P 500 Futures -0.1% at 1,948]

- Market Focal Points/Key Themes: European equity markets open higher following gains in the US and Asia but gains were capped amid rise in core government bonds, Barclays weighed down by allegations from NY AG, LSE confirms acquisition of Frank Russell, Standard Chartered declines on cautious outlook, UK Homebuilders in focus ahead of BoE FPC comments, Potential merger among chipmakers (Dialog Semi and AMS AG), German utilities outperform, Upcoming US May Core PCE inflation data, Philip Morris cautious on FY15 outlook

By Sector
- Consumer Discretionary [ BPTY.UK +5% (takeover speculation)]
- Basic Materials/Resources [Kenmare Resources KMR.UK +13% (takeover speculation)]
- Technology [AMS AMS.CH +5% (merger talks), Dialog Semi DLG.DE +4% (merger talks); Imagination Technologies IMG.UK -4.5% (broker commentary)]
- Healthcare [Fresenius Medical Care FME.DE +2.5% (broker commentary)]
- Financials [London Stock Exchange LSE.UK +5% (acquisition); Standard Chartered STAN.UK -5% (cautious outlook), Barclays BARC.UK -4.5% (probe related to high-frequency trading), Valartis VLRT.CH -3% (profit warning)]
- Stoxx50 sectors [Utilities +0.3%, Telecom +0.3%, Technology +0.2%, Industrials +0.1%, Consumer Non-Cyclical flat; Consumer Cyclical -0.4%, Basic Materials -0.4%, Financials -0.3%, Energy -0.3%]

- EU Leader Summit Draft: To support 'growth-friendly' measures. Calls for fiscal discipline to be balanced to support growth
- German IFO Institute raised iat German 2014 GDP growth forecast from 1.9% to 2.0% and set 2015 GDP growth at 2.2%
- Italy Business Lobby Confindustria cuts Italy 2014 GDP growth forecast from 0.7% to 0.2%
- Taiwan Central Bank expanded mortgage restrictions to further cool property market in northern part of country

Currencies/Fixed Income:
- EUR/USD currency volatility matched all-time lows since the Euro's 1999 inception at 4.55%. Levels little changed in listless trading. EUR/USD hugs the 1.36 handle for the 8th straight session
- GBP/USD continued to hove below the pivotal crisis level of 1.7050 ahead of the BOE Financial Policy Committee report on financial stability. UK might take action to cool UK housing market

Political/In the Papers:
-(UK) S&P's Kraemer: May review UK rating if it chooses to go forward with the EU exit referendum vote
- (PL) Poland PM Tusk wins parliamentary confidence vote relating to crisis created by release of taped conversations of top officials
-(CN) PBoC did not conduct open market operations (OMO) in today's session (1st halt in 37 sessions); Injected net CNY12B this week v injected CNY15B prior
- (CN) China National Audit Office: Finds $15B of loans backed by falsified gold trade among 25 gold trading firms in spot checks - Chinese press

**Looking Ahead***
All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)
- (BR) Brazil May Total Federal Debt (BRL): No est v 2.052T prior
- 05:30 (ZA) South Africa May PPI M/M: 0.6%e v 1.0% prior; Y/Y: 0.9%e v 8.8% prior
- 05:30 (UK) BOE Gov Carney speaks in London on Financial Stability Report
- 05:30 (HU) Hungary Debt Agency (AKK) to sell Bonds
- 06:45 (US) Daily Libor Fixing
- 07:00 (RU) Russia Gold and Forex Reserve w/e Jun 20th: No est v $468.7B prior
- 07:00 (CZ) Czech Central Bank Interest Rate Decision: Expected to leave both Repurchase Rate and EUR/CZK cross at 0.05% and 27.00 respectively
- 07:00 (BR) Brazil Jun FGV Consumer Confidence: No est v 102.8 prior
- 08:00(BR) Brazil May Unemployment Rate: 5.0%e v 4.9% prior
- 08:15 Baltic Dry Bulk Index
- 08:15 Czech Central Bank gov Singer post rate decision press conference
- 08:30 (US) Initial Jobless Claims: 310Ke v 312K prior; Continuing Claims: 2.56Me v 2.561M prior
- 08:30 (US) May Personal Income: 0.4%e v 0.3% prior; Personal Spending: 0.4%e v -0.1% prior
- 08:30 (US) May PCE Deflator M/M: 0.3%e v 0.2% prior; Y/Y: 1.8%e v 1.6% prior
- 08:30 (US) May PCE Core M/M: 0.2%e v 0.2% prior; Y/Y: 1.6%e v 1.4% prior
- 08:30 (CA) Canada Apr Average Weekly Earnings Y/Y: No est v 3.1% prior
- 08:30 (US) Weekly USDA Net Export Sales
- 08:30 (US) Fed's Lacker
- 10:30 (US) Weekly EIA Natural Gas Inventories
- 11:00 (US) Jun Kansas City Fed Manufacturing Activity: 10e v 10 prior
- 11:00 (EU) EU Leaders begin 2-day summi
- 11:00 (US) Fed to purchase $0.85-1.10B in Notes
- 12:00 (FR) France May Net Change in Jobseekers: +6.0Ke v +14.8K prior; Total Jobseekers: 3.37Me v 3.364M prior
- 13:00 (US) Treasury to sell $29B in 7-Year Notes
- 13:05 (US) Fed's Bullard speaks on Monetary Policy in New York
- 19:05 (UK) Jun GfK Consumer Confidence: No est v 0 prior
- 19:30 (JP) Japan May Jobless rate: 3.6%e v 3.6% prior
- 19:30 (JP) Japan May National CPI Y/Y: 3.7%e v 3.4% prior; CPI Ex Fresh Food Y/Y: 3.45e v 3.2% prior; CPI Ex Food, Energy Y/Y: 2.2%e v 2.3% prior
- 19:30 (JP) Japan Jun Tokyo CPI Y/Y: No est v 3.1% prior; CPI Ex-Fresh Food Y/Y: No est v 2.8% prior; CPI Ex Food, Energy Y/Y: No est v 1.9% prior
- 19:50 (JP) Japan May Retail Sales M/M: +3.0%e v -13.7% prior; Y/Y: -1.6%e v -4.4% prior; Large Retailers' Sales: -2.5%e v -6.8% prior