January 30, 2012
EU Leaders gather in Brussels for their first summit of 2012, amid deteriorating economic conditions and a struggle to complete a Greek debt write-off that may make it more likely for Portuguese investors to be next in line to accept a loss. Germany has proposed the creation of a commissioner , appointed by euro-member states, with the power to veto budget decisions by Greece as a condition of a €130B bailout for Athens. “Our partners acknowledge that European integration is based on the institutional equality of nation-states and on respect for their national identity and dignity,” Venizelos said in an e-mailed statement from his office in Athens yesterday. “Whoever poses a dilemma between economic aid and national dignity is ignoring basic historical lessons.”
French President Nicolas Sarkoszy said he will impose a 0.1% financial transactions tax, sending shares of French banks broadly lower. European stocks are heading for their biggest two-day drop in two months as Greece signaled strong opposition to economic oversight in exchange for aid. As of 9am EST, the Euro Stoxx 50 was down -1.30%, led down by Spain’s IBEX 35 Index and Italy’s FTSE MIB, both down about -1.45%. Italy’s 10yr rose 23bps to 6.084% and the Euro tumbled 0.8% to $1.3112. Credit swaps now imply a 71% chance Portugal will default within 5yrs. Asian equities closed down today as well, with the Hang Seng Index down -1.66% and the Nikkei 225 down -0.54%. S&P 500 Index Futures had lost -0.9%, while the 10yr Treasury slipped 6bps to 1.827%; the U.S. Dollar Index had added 0.5%. Copper fell for a second day, and oil dropped 0.7% in New York to $98.89 a barrel.
Commerce Department figures released today showed consumer spending stalled in December, with purchases little changed this month, after rising 0.1% in November. 66% of the 169 companies in the S&P 500 that have reported earnings this year topped analysts’ forecasts, according to data compiled by Bloomberg.
Italy, Belgium, and Spain must sell €22B of securities this week. Spanish 2yr yields jumped 13bps today to 2.66%, and equivalent Portuguese yields were at 20.71%. The Markit iTraxx SovX Western Europe Index climbed 7.5bps to 331.5.
Today’s Economic Data Lineup (EST)
8:30am, Personal Income, Dec., est. 0.4% from 0.1%
8:30am, Personal Spending, Dec., est. 0.1% from 0.1%
8:30am, PCE Deflator (Y/y), Dec., est. 2.3% from 2.5%
8:30am, PCE Core (M/m), Dec., est. 0.1% from 0.1%
8:30am, PCE Core (Y/y), Dec., est. 1.7% from 1.7%
9:00am, France to sell up to EU4b 84-day bills
10:30am, Dallas Fed Manf., Jan., est. 0 from -3
11:00am, Fed to purchase $4.25b-$5b notes in 2/15/2020 to 11/15/2021 range
11:30am, U.S. to sell $31b 3-month, $29b 6-month bills
U.S. Treasury Releases Quarterly Borrowing Estimates
“If you have no one to encourage you, instead of using that as an excuse for failure, encourage yourself and use that as a reason why you must succeed.”
T 312 634 8902
F 312 930 3187
C 312 618 8339