Next week kicks off the new quarter with Eurozone bond supply at EUR 19.5bln (EUR 16.77bln prior week). Monday sees the Italian tesoro issue EUR 5.5-7.5bln of their 2019, 2022 CCTeu and 2025 bonds, while Wednesday sees the zero coupon German Bobl auction. The last Eurozone bond auction before the Easter holiday falls on Thursday comes in the form of France, where they are expected to sell their 0.5% 2025 OAT, off-the-run 3.5% 2026 and their 3.25% 2045 OAT which in total will fall between EUR 7-8bln. Elsewhere, redemptions from Spain fall at EUR 10.54bln with Belgium paying down EUR 10.4bln on principles maturing on 5yr & 10yr bonds allied to EUR 6.1bln of coupons too, according to analysts at IFR.
AUCTION PREVIEW: ECB’s 7-Day MRO
The ECB last allotted EUR 120.508 bln in 7-Day op MRO to 147 bidders, results are published after 1010BST.
AUCTION PREVIEW: Belgian (Up to) EUR 2.5bln 3- and 6-Month T-Bill Auction
The most recent 3-Month T-Bill offering was covered 2.11 times and at an avg. yield of -0.160%. The 6-Month offering was last covered times 1.69 and at an avg. yield of -0.152%. Bids are submitted by 1030BST and results are published shortly after.
This week, there is no supply from the US but there will be the prospect of USD 78bln worth of redemptions from 2- and 5-year notes due on Monday. However, focus will likely turn to the refunding announcement on Thursday. Expectations are for the Treasury to keep the sizes of the 3-, 10- and 30-year notes and bonds unchanged at USD 24bln, USD 21bln and USD 13bln, respectively.
Lloyds Banking Group just got permission to stop paying investors potentially billions of pounds worth of returns from a type of investor bond that helped keep it afloat during the credit crisis. Lloyds received £20.5 billion in state handouts between 2008 and 2009 following the credit crisis. In return, the government took a 43.4% ownership stake […]
RanSquawk: March 31, 2015 3:12 am
RANsquawk :: News & Events
Analysts at Westpac say that iron ore may fall below USD 50/T in 2015 and may fall further to USD 47 in H2. (BBG)
South Africa Mine minister will meet later today to disclose the governments assessment of whether mining companies have reached targets set in their ‘Mining Charter’. (RTRS)
Copper inventories in China fell in Q1, with consumption rising by 0.7% – its weakest in 7 years. This comes amid talk that tightening in issuance of letters of credit by Chinese banks is dampening appeal in the red metal. (FT)
For all Metals stories please refer to the Daily Metals Opening News in the research section
RanSquawk: March 31, 2015 3:10 am
RANsquawk :: News & Events
Farmers plant rice seedlings in a field near a residential compound in Shaxi township, Guangdong province March 29, 2015.
SHANGHAI (Reuters) – As stock market investors cheer Beijing’s latest bid to boost the country’s ailing housing sector, Chinese bankers are gritting their teeth over the risks they face in further relaxing lending rules to home buyers.
Alarmed by persistent weakness in the property market and its increasing drag on the economy, policymakers said on Monday they were cutting downpayments levels for the second time in six months and offering bigger tax breaks.
The hope is that by allowing buyers to get mortgages more easily, China can revive the housing market, which accounts for 15 percent of its economy, and where prices are falling at a record pace.
But for bankers who are in charge of passing on the policy discounts, the gains for home buyers are in some ways being made at their expense.
“The difficulty for us now is that the deposit has gone down, which increases the risks for us,” said a loan officer at one of China’s four biggest banks. “It’s a question of leverage.”
“We won’t lend if someone isn’t credit worthy – there is a lot of backup due diligence we do these days – and it’s got stricter,” the banker said.
Bankers at two other firms said they, too, will toe the policy line and reduce downpayment levels for second-home buyers, but that is about as far as they will go, and mortgage rates are unlikely to be lowered.
“We’re already losing money at a 70 percent downpayment level”, said a banker at a mid-sized Chinese bank. “We’re unlikely to reduce the lending rate.”
China’s biggest banks recently reported lower profits and a spike in bad loans to multi-year highs at the economy slows, adding to their concerns about increasing their exposure to weaker areas of the economy such as the property market.
A massive glut of unsold homes could also offset higher sales, keeping prices and fresh investment under pressure.
“Whether the current measures are able to support the property market remains uncertain. Nevertheless, it is getting clearer that (economic) growth has again topped policymakers’ minds,” economists at OCBC said in a research note, adding it sees increasing chances for more interest rate cuts and other easing measures in the second quarter of the year.
For share investors, however, easier lending policies for home buyers are welcome news nonetheless.
China stocks .CSI300 hit fresh seven-year highs on Tuesday morning, helped by rises in property and banking stocks. China markets have rallied 16 percent so far this year, on top of a 50 percent surge in 2014, fueled largely by expectations of more economic stimulus measures.
(Reporting by Koh Gui Qing; Editing by Kim Coghill)
TOKYO/TAIPEI (Reuters) – Japan remains cautious about signing up to the China-led Asian Infrastructure Investment Bank (AIIB), indicating that Tokyo will miss the March 31 deadline for application, but both Taiwan and Norway said they would seek to join the institution.
RanSquawk: March 31, 2015 3:02 am
RANsquawk :: News & Events
Have you ever bought the stock market because of good news only to see it stall and then fall sharply? Or, sold it in a panic as the market was dropping because of bad news that had just hit the tape only to see it strongly rebound? This scenario happens more often then everyone thinks.
The reason is in large part because the markets, in the short-term, trades based on perception. Notice I’m stating that this happens in the short-term rather than longer-term. That’s because in the long-term fundamentals do influence the price of financial futures, and commodities. That said, fundamentals are always lagging price. Recall the last time all the economists came to a consensus and proclaimed the economy was in a recession. By then the stock market has already been priced lower to account for the slowing business conditions and it was too late sell. In fact, it was probably a low risk buying opportunity at that point.
Now, the shorter term moves that happen based on perception drive order flow, hence, the dynamics of supply and demand are in full force. It’s actually very simple when you stop and think about it. We know that in any free market in order for a transaction to occur there has to be two willing parties that agree on a specific price. Put another way, a buyer and seller have to meet at a certain price. The only reason a buyer comes into the market is that he perceives prices are relatively low and, thus, he can sell at higher prices to capture a profit. On the other hand, the seller believes that at current prices the market is expensive or fairly valued and sees little upside potential. So these two market participants with polar opposite views meet in the market place. What’s interesting about this dynamic is that they both think they’re smart in their decision. Ultimately however, only one of them can fulfill this attribute.
A recent example of how this all works is in the Crude Oil market. Crude prices have been falling since last summer due to concerns of a slowing Global economy and an abundance of supply in Crude oil inventories. This move down in Crude Oil prices is based on real facts and figures, however, prices began falling much earlier than when all the analysts made this information available to the general public. The perception now is that Oil Prices will continue falling until demand picks up. Eventually, when the Supply/Demand equation shifts, price will rally strongly. The more immediate question for traders is where to buy or sell with the lowest risk and highest probability. This can only be found at the supply and demand zones in the smaller time frames where the institutions perceive value, which is where they will buy. They will also be sellers where they perceive prices to be too expensive.
So in the final analysis, price movement is a function of supply and demand based on people’s perceptions of value and their emotions of fear and greed. As astute traders, the only perception we should be interested in is that of the big banks and institutions and thus, aligning our trades with theirs.
There’s a reason why these Wall Street Institutions are referred to as the “smart Money” and everyone else … well, let’s just say they’re not as smart.
Until next time, I hope everyone has a great week
Equities, E-mini Futures, Technical Analysis Strategies, Platform Immersion, Personal Trading Plan Instructor, Trader Mentor and Author
Gabe got his start in the markets as a broker trainee for Paine Webber, a mere 3 months before the market crash of 1987. He witnessed the gut wrenching fear of investors during that time period and the wild speculative euphoria of the late 90’s. That experience brought to light the importance risk management plays in trading and investing. In fact, it’s greatly influenced the way he trades today.
He spent 15 years as a stock and commodities broker, conducting technical analysis seminars through-out Southern California. After many years of managing other people’s money, Gabe now concentrates full time on trading his own portfolio and teaching. Students will benefit from his first hand experience of daily involvement in the market. He brings with him an acute awareness and understanding of how the markets really work. Articulating this knowledge clearly, succinctly, and with enthusiasm is something students can appreciate. This gift for communicating was honed through many years of public speaking.
He currently holds a series 7, 63, 9 and 10 (securities and options principals license.)
Gabe looks forward to sharing his passion for trading and the markets with you at one of his next scheduled classes.
RanSquawk: March 31, 2015 3:00 am
RANsquawk :: News & Events
China’s President Xi Jinping (front C) poses for photos with guests at the Asian Infrastructure Investment Bank launch ceremony at the Great Hall of the People in Beijing October 24, 2014.
Following last year’s widely-publicized plunge in gasoline prices, a lot of economists were optimistic we could be on the brink of a new boom in consumer spending, something that’d be especially bullish as personal consumption accounts for nearly 70% of the US economy. So far, that just hasn’t been the case. Instead, consumers appear to […]
A Philips logo is seen at Philips headquarters, where Philips CEO Frans van Houten gave a presentation of the company’s 2013 full-year results, in Amsterdam January 28, 2014.
Reuters/Toussaint Kluiters/United Photos
AMSTERDAM (Reuters) – Phil…
RanSquawk: March 31, 2015 2:17 am
RANsquawk :: News & Events