Intraday Market Thoughts

Ezone Yields +20% Post-LTRO-2, Onto More Fed Speak

by Patrik Urban
Apr 10, 2012 13:02

Periphery spreads widening; Spanish 10 yr yields+ 20% up since LTRO-2.

Italian yields +8% up since LTRO-2 and 19% since PSI deal of Mar 9;

Greek yields + 22% since Mar 9 PSI; Portuguese yields -15% since Mar 9 PSI but +10% since Mar 28 low.Eurozone sentix index dropped; Swiss unemployment steady; German trade surplus declined. Focus turns to IBD/TIPP economic optimism, wholesale inventories and three FED speeches. 1 EURUSD short in progress, the other stopped out. For the latest on Thursdays Premium trades, please see below.

The USD is stronger against all majors except JPY. European equities are losing about 1% and the relative strength winner JPY.

Positive market sentiment turned 180 degrees in the second part of the Asian session and the greenback continues to push higher as concerns about global growth intensified and focus turned to European periphery.

Spanish spreads continue to widen and the 10 year spread reached the highest level since the end of November at 424 bps. Meanwhile, traders are supposedly noticing that the LTRO liquidity is drying up which could impact demand for bonds in the days ahead. Focus will turn to Italy that will sell 3 month and 12 month bills tomorrow and 2015 BTP on Thursday. ECB deposits continue to be elevated at EUR 784.83 bln on last Thursday.

On the data front, Eurozone Sentix investor confidence for April dropped to -14.7 from previous -8.2 while market anticipated a slight improvement to -8.1, Swiss unemployment rate remained at 3.1% in March, German trade surplus declined to EUR 13.6 bln in February from January's EUR 15.1 bln and UK CB leading index rose in February 1% from January's 0.7%.

The US session has only second tier data releases today. The IBD/TIPP economic optimism is expected to rise in April to 49.1 from 47.5 and wholesale inventories are seen 0.5% higher in February from previous 0.4%. Both reports are due at 10:00 am ET.

There are also THREE FED SPEECHES scheduled for the afternoon. Fed's Fisher speaks at12:30 pm in Oklahoma, Atlanta FED president and FOMC member Dennis Lockhart delivers a speech at 12:45 pm at the conference in Stone Mountain and Fed's Kocherlakota speaks at 2:30 pm in Minnesota.

The latest from those Premium Intermarket Insights; 1 EURUSD short in progress, 1 stopped out. AUDUSD short all done, gold longs unfilled & so are the EURJPY shorts. Silver short in progress. Both USDCAD trades remain in progress. Access to today's Insights: Nonsubscribers pls click here:


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