Archived IMT (2011.04.20)

Euro hits fresh 2011 highs on strong demand for Spains 10 yr auction, volatile sterling reacts to the status quo in BoE minutes, US existing home sales to echo modest uptick in starts/permits data overnight, while earnings from heavy industrials and Wells Fargo look to maintain tech-driven surge in equities.

Early London session remains action-packed following a broad-based rebound in risk-on trade throughout Asia. USD and JPY in particular have given up gains to the benefit of AUD, NZD, EUR, GBP and CAD - JPY damage is particularly notable, as cross-rates hit multi-session highs and the USD/JPY pair closes its first bullish daily candle in 9 trading days. An upward breach of week-long downtrend at Y82.70 paves the way to former support at Y83.50.

EURO HIT A FRESH 2011 HIGH at $1.4545. Worries over the bailout slamming on the shores of Spain that permeated in the local bond market are now on the backburner after a successful sale of 10 and 13 year debt. Both issues saw impressive bid-cover demand, with EUR3.38B sold well above the expected range. Portugal also helped its bailout cause with a EUR1B backstop issue, as private market demand is bound to boost Lisbon's position on talks with IMF/EC officials. In other economic data on the continent, German PPI was below consensus at 6.2% y/y but hardly spoiled the single currency party.

CABLE MATCHED ITS Apr 14th high at $1.6380 but fell back to $1.6310 after the Bank of England's latest minutes revealed a lack of any meaningful progress toward a rate hike. Once again, arch-hawk Sentance voted for a 50bp increase, while Weale and Dale supported a more modest 25bp move. Posen stuck to his dovish guns with a call to expand assets buys. His recent remarks indicate that only an upgrade to consumption potential would sway his opinion - last month Posen deftly called the lagging wage inflation as the "dog that doesn't bark."

US EXISTING HOME SALES at 10 EST head off todays US macro calendar, expected to rise back above the 5M mark. Note that this is the least price-sensitive of the US housing data points - in other words, distressed homeowners are far less willing to take a loss than the homebuilders are inclined to move inventory through discounting. Last month's median sale price component - a 9-year low $156K - suggested more and more sellers are waving the white flag.

PRE-MARKET OPEN US EARNINGS session will see Q1 results from cloud stalwart EMC as well as Altria. ATT will post its quarterly results and likely defend the hefty pricetag it offered to DT for T-Mobile USA. Rail giant Union Pacific is likely to benefit from rising fuel costs, while Wells Fargo will round out the earnings from banking heavyweights. Note that this perennial Buffett favorite saw the Omaha oracle boost his holdings even further during the most recent reported quarter.