European Market Update: Majority of Major European PMI Manufacturing data dips to 18-month lows

***Economic Data***

– (IN) India May Trade Balance: -$15.0 v -$8.9B prior; Exports Y/Y: 56.9% v 34.4% prior; Imports Y/Y: 54,1% v 14.1% prior
– (IR) Ireland NCB Manufacturing PMI: v 50.5 prior
– (AU) Australia JUN RBA Commodity Price Index: 109.4 v 107.1 prior; RBA Commodity Index SDR y/y: 28.2% v 29.1% prior
– (SW) Sweden Jun Swedbank PMI Survey: 55.5e v 56.1 prior
– (HU) Hungary Jun Manufacturing PMI: 54.4 v 52.3 prior
– (TU) Turkey Jun Manufacturing PMI: 52.3 v 50.6 prior
– (PD) Poland Jun Manufacturing PMI: 51.2 v 52.6 prior
– (NO) Norway Jun PMI:56,1 v 57.0e
– (NO) Norway Jun Unemployment Rate: 2.5% v 2.5%e
– (DE) Denmark May Retail Sales M/M: -1.0% v -0.5%e; Y/Y: -2.4% v +8.1% prior
– (SP) Spain Jun Manufacturing PMI: 47.3 v 48.2 prior
– (CZ) Czech Jun Manufacturing PMI: 55.1 v 55.9 prior
– (SZ) Swiss Jun SVME-Purchasing Managers Index: 53.4 v 57.8e
– (IT) Italy Jun PMI Manufacturing: 49.9 v 50.6e; lowest reading since Oct 2009
– (FR) France Jun Final PMI Manufacturing: 52.5 v 52.5e
– (GE) Germany Jun Final PMI Manufacturing: 54.6 v 54.9e; Lowest since Jan 2010
– (EU) Euro Zone Jun Final PMI Manufacturing: 52.0 v 52.0e; Lowest since Dec 2009
– (IT) Italy Q1 Unemployment Rate: 8.2% v 8.3%e; Unemployment Rate Seasonally Adj: 8.1% v 8.1%e
– (GR) Greece Jun PMI Manufacturing: 45.5 v 44.5 prior
– (UK) Jun PMI Manufacturing: 51.3 v 52.3e; Lowest since Sept 2009
– (EU) Euro Zone May Unemployment Rate: 9.9% v 9.9%e
– (DE) Denmark Jun PMI Survey: 62.5 v 58.0 prior
– IT) Italy Q1 YTD Deficit to GDP Ratio: 7.7% v 4.5% prior
– (SA) South Africa Jun Kagiso PMI: 53.9 v 54.9e

Fixed income:
– (SA) South Africa sold total ZAR600M in inflation-linked 2022, 2028 and 2033 bonds
– (IN) India sold total INR150B vs. INR150B indicated in 2018, 2021, 2027 and 2040 bonds

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***

***Notes/Observations:
– BRIC Manufacturing PMI drift lower to multi-month lows
– Most European PMI at 18-month lows
– Focus shifts from Europe’s debt woes to US deficit ceiling discussions
– Axel Weber to receive CHF1.5M as non-independent vice Chairman of UBS; Dealers ponder how he feels now about bankers pay

Equities:
FTSE 100 +0.40% at 5966, DAX +0.10% at 7385, CAC 40 -0.10% at 3979, IBEX 35 +0.20% at 10,379, FTSE MIB +0.05% 20,196, SMI +0.60% at 6224

– European shares opened flat but remained in positive territory boosted by the financial sector. Banks throughout Europe seem to agree to rollover the Greek debt, willingly or not. German banks and insurance companies noted that they will extend Greek debt worth about €3.2B, while the other European peers such as Italian banks may also join the club in the steps of the French model. Basic resource stocks traded lower after Chinese manufacturing slowed to levels not seen since 2009. US economic data remain worrying as initial jobless claims continue to be higher than expected. Next week, investors will eye the US payroll data a crucial indicator to US’s economic health.
– Among notable individual names, Prosieben [PSM.GE] rose about 5% after raising its guidance for 2011 revenue growth to in the mid single digit percent range vs. prior view of low-single digit range. Q2 results are also expected to be better. Thyssenkrupp [TKA.GE] traded lower after struggling to sell its Blohm and Voss civilian shipbuilding assets. Company is in talks with another potential buyer.

Speakers:
– Czech Central Bank released its minutes from its Jun 23rd meeting in whicgh t left the Repo Rate unchanged at 0.75%: The MPC did note that CPI risks were on the upside but that inflationary expectations remained ‘well anchored ‘ . Overall it saw the risks to path of interest rates were balanced. The planned VAT increase were upside CPI risk but the majority of the Board did not regard the evolution of labor market as an inflation risk. Board members Janacek and Zamrazilova voted for a 25 bps hike
– Czech Central Bank Janacek commented in a newspaper interview that interest rates should be gradually raised in multiple steps; but could see one large one. He added that pro-inflationary risks were clearly greater than anti-inflationary risks. If ECB rates were raised to 1.5% then the CZK currency could potentially become more volatile
– Hungary Central Bank Gov Simor commented that risk continued to remain due to Euro zone debt crisis and that the Hungarian risk premium remained high. He did note that if government fiscal plans were fully implemented then monetary conditions might be loosened. Risks underpinning higher CPI were rising and added that further growth in raw material prices might necessitate stricter monetary condition. Household demand growth slowed despite higher income but were at healthy levels
– Austria 2011 WIFO GDP Estimate: Raised 2011 GDP growth view to 3.0% from 2.5% prior. It trimmed the 2012 GDP forecast to 1.8% from 2.0% prior view.

Currencies/Fixed income:
– FX markets appeared to focus on the US debt ceiling negotiations and overall global growth prospects as Greek debt risk receded after the passage of the austerity measures. The EUR/USD tested fresh 3-week highs of 1.4550 in the session.
– The CHF continued to weaken in the aftermath of the Greek Pasok victories in Parliament to secure the terms of the next €12B in IMF/EU aid. EUR/CHF cross was probing the 1.23 handle while USD/CHF was higher by almost 150 pips to test 0.8460.
-For the most part the Euro did not react to the weaker PMI Manufacturing figures but GBP was not so fortunate. The GBP/USD hit session lows just below 1.6000 after U.K. manufacturing came in below expectations. Sterling trade-weighted index declined to 15-month lows of 77.5

Political/ In the Papers:
– An S&P analyst stated that risks to Japan’s sovereign rating are to the downside. The previous downgrade anticipated some difficulty of implementing reform. Political instability continues to present challenges to reform.
– American banks have been warned by regulators to limit job cuts in their risk management departments. According to the Financial Times, the Fed is trying to assure that banks are not weakening their internal controls.
– The top German financial firms, which hold about €10 billion in Greek bonds, agreed to roll over €3.2 billion in bonds due in the period up to and including 2014, as summarized in the Financial Times. The involvement of public banks in Germany is seen at about €1.2 billion, and according to the German financial companies, 55% of their debt holdings are due to mature after 2020. The article notes that the proposal by German banks to roll over all their Greek bonds maturing up to 2020 seems to have been withdrawn. Some analysts said the Germany plan might not be a large enough of a contribution to the Greek aid package.
– Rise in risk appetite following Greece’s austerity votes caused companies to accelerate planned debt sales. Companies which have issued debt this week include Imperial Tobacco, ING and Total. Before the rush of bond issuances by European companies, activity in the corporate bond market had dried up amid sovereign debt concerns.
– A financial blog wrote that the CHF currency could possible contribute o a huge mortgage defaults in Central Europe. The article noted that the historically low interest rates on loans in CHF currency have led consumers in major Central European countries such as Poland, Slovakia, Hungary and the Czech Republic to acquire substantial loans, particularly mortgages, in CHF. The article noted that around 53 % of outstanding mortgages in Poland and about 60%of those in Hungary were denominated in CHF currency

**Looking Ahead***
– 8:00 (BR) Brazil May Industrial Production M/M: +1.2%e v -2.1% prior; Y/Y: +2.6%e%e v -1.3% prior
– 9:00 (BR) Brazil Jun PMI Manufacturing: no est v 50.8 prior
– 9:55 (US) Jun Final University of Michigan Confidence: 72.0e v 71.8 prelim
– 10:00 (US) Jun ISM Manufacturing: 51.8e v 53.5 prior; ISM Prices Paid: 71.8e v 76.5 prior
– 10:00 (US) May Construction Spending M/M: 0.1%e v 0.4% prior
– 10:00 (MX) Mexico Central Bank Economists Survey
– 10:00 (MX) Mexico May Remittances: $2.2Be v $1.9B prior
– 10:00 (BR) Brazil Jun Trade Balance: $4.0Be v $3.5B prior
– 12:00 (IT) Italy Jun New Car Registrations Y/Y: No est v 3.6% prior
– 13:00 (IT) Italy Jun Budget Balance: no est v -€5.0B prior; Budget Balance YTD: No est v -€44.8B prior
– 17:00 (US) Jun Domestic Vehicle Sales: 9.40Me v 9.22M prior; Total Vehicle Sales: 12.05Me v 11.76M prior
– (CO) Colombia Central Bank Monetary Policy Meeting Minutes
July 2nd
– (EU) Euro-Area Finance Ministers meet on Aid for Greece

Similar Posts:

Share
July 1st, 2011 in Forex News | tags: Data, Manufacturing Data

Leave a comment

Your comment