Daily Comment RR 01Aug11

8/6/2019 Daily Comment RR 01Aug11

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Daily CommentRaiffeisen RESEARCH

1 August 2011

Established markets: In the US President Obama and leading re-presentatives of both parties agreed on Sunday evening to raisethe US debt ceiling in two stages by a total of USD 2,100 billion(which covers the period until after the 2012 elections) tied to spen-ding cuts of USD 917 billion as well as additional budget consoli-dation measures of USD 1,500 billion (both of which are to be cu-mulative over 10 years), with the latter still to be finalised in detailby the end of the year (should no agreement be reached by then,spending cuts will be implemented automatically across the entirebudget). The agreement must still be approved by Congress, with afirst vote planned for today. The chances that it will be passed are

good. Moodys already welcomed the agreement; with respect toS&P, however, we continue to expect that the consolidation effortswill be rated too low, resulting in a downgrade to AA (which wouldbe manageable). The USD this morning recouped Fridays lossesagainst the JPY, while gold and US govies were down this morning.Friday surprised to the downside with very weak US economicdata Q2 GDP growth came in at only 1.3% qoq (annualized),with Q1 revised downward to 0.4%, and the Chicago PMI fell 2.3points to 58.8. growth Todays ISM index is all the more keenlyawaited as a result a slight decline is likely following last monthssurprisingly strong increase; however, a level of 54.5 would stillbe significantly stronger than the actual economic growth in the se-cond quarter. In Italy the PMI index will be released today; with acurrent reading of 49.9, it is expected to decline further.

Equity markets: The paralysing debate regarding lifting the USdebt ceiling (an agreement is now anticipated soon), little to calmworries about the situation in the countries of the eurozone peri-phery and not always completely pleasing company results forthe second quarter made it a gloomy week on the internationalstock markets. The broad S&P 500 fell on each of the five tradingdays and is looking back at the poorest week of the year so farand the third month in a row of capital losses. Not even the re-porting season is managing to give the markets much of a boost.In the US, the majority of companies were able to beat forecasts

(78%) so that Q2 profit estimates were subsequently revised up-wards considerably (from 12.7% at the start of July to the current18.1%), whereas the greatest number of disappointments werereported in Europe and Japan. This trading week will see the pub-

Hourly QEUR= 07:0022.07.2011- 21:0001.08.2011(GMT)

1 4192

1,441838,2%

1,443938,2%

1,445861,8%

1 4192

1,434238,2%

1,423438,2%

1,431361,8%

1,4441100,0%

1,446538,2%

Cndl;QEUR=;Bid

06:0001.08.2011;1,4393;1,4403;1,4387;1,4391

Cndl;QEUR=;Bid

06:0001.08.2011;1,4393;1,4403;1,4387;1,4391

Price

USD

.1234

1,42

1,422

1,424

1,426

1,428

1,43

1,432

1,434

1,436

1,438

1,44

1,442

1,444

Price

USD

.1234

1,42

1,422

1,424

1,426

1,428

1,43

1,432

1,434

1,436

1,438

1,44

1,442

1,444

0 9: 00 1 7: 00 2 0 :0 0 0 4: 00 1 2: 00 2 0: 00 01 :0 0 0 9: 00 1 7: 00 0 1: 00 0 9: 00 1 7: 00 0 1: 00 0 9: 00 1 7: 00 0 1: 00 0 9: 00 1 7: 00 2 0 :0 0 0 4: 00 1 2: 00 2 0: 00

22 Juli 2011 25 Juli 2011 26 Juli 2011 27 Juli 2011 28 Juli 2011 29 Juli 2011 01 August 2011

Chart of the day

Source: Thomson Reuters, Raiffeisen RESEARCH

Market overviewcur. 1T 52W H 52W L Ytd

Interest rates, yields

3M Euribor EUR 1.61% -0.1 BP 1.6% 0.9% 60.3 BP

3M Libor USD 0.26% 0.2 BP 0.4% 0.2% -4.7 BP

Bund Future EUR 130.36 0.7% 134.8 119.9 4.0%

US T Note Future 125.41 -0.2% 125.9 115.1 6.1%

Currencies

EUR/USD 1.439 0.1% 1.49 1.26 -7.5%

EUR/JPY 111.700 1.0% 123.3 105.4 2.9%

EUR/CHF 1.141 0.9% 1.4 1.1 -9.6%

EUR/CZK 24.197 0.1% 25.4 23.9 -3.4%

EUR/HUF 268.040 -0.6% 289.6 261.9 -4.0%

EUR/PLN 3.989 -0.2% 4.12 3.83 0.6%

Equity markets

S&P 500 1292 -0.6% 1371 1040 2.8%

Dow Jones I. A. 12143 -0.8% 12876 9937 4.9%

Nasdaq Comp. 2756 -0.4% 2888 2099 3.9%

DJ EuroStoxx 50 2670 -0.8% 3077 2560 -4.4%

DAX 7159 -0.4% 7600 5834 3.5%

ATX 2611 -0.5% 3013 2366 -10.1%

Nikkei 225 9973 1.4% 10892 8228 -2.5%

Emerging Markets

Hang Seng (China) 12613 1.9% 14219 11296 -0.6%

Sensex (India) 18341 0.8% 21109 17296 -10.6%

Bovespa (Brazil) 58823 0.2% 73103 58009 -15.1%

JALSH ( South A frica) 31208 -0.8% 33335 26432 -2.8%

Commodities

Brent Oil USD/bbl 118 1.1% 125 79 24.0%

Gold USD/oz 1613 -0.9% 1633 1175 13.5%

Credit markets

iTRAXX Europe 111 4 BP 126 94 12 BP

ITRAXX Crossover 411 5 BP 531 352 1 BP

iTRAXX Fin. Senior 177 5 BP 210 107 0 BP5J CDS Greece. 1722 12 BP 2571 661 648 BP

5J CDS Spain 289 13 BP 301 121 11 BP

5J CDS Portugal 914 3 BP 1131 188 492 BP

Prices as of 1 August 11, 07:59 a.m. (CET)Source: Bloomberg

EUR/USDLast: 1.4397 Buy 1.4415Target: 1.4465 1.4507Bullish Flag, stop 1.4326 -> 1.4228 1.4192.

August 01st, 2011 07:34 CET

Important indicators todayRBI Kons. last

USA16:00 ISM Manufacturing Jul. 54.5 55.0 55.3

Europe09:45 IT: PMI Manufacturing Jul. 48.5 49.0 49.9

Emerging Markets03:00 CN: PMI Manufacturing Jul. n.a. 50.1 50.9

04:30 CN: PMI Manufacturing (HSBC) Jul. n.a. 50.1

Source: Bloomberg, Raiffeisen RESEARCH


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Daily Comment

lication of several more company results. In addition,developments in the public debt crisis and importanteconomic data will have an impact on the marketenvironment. On theJapanese stock market, the fo-reseeable agreement on the debt limit got the newweek off to a friendly start. Futures indications pointto a solid opening on the European stock markets.

Credit markets: On Friday Moodys announced itsintention to review the ratings of five major Spanishbanks (incl. BBVA, Banco Santander) with a view toa possible downgrade. S&P commented negativelyon Danish banks on Friday as the agency regardssome banks as being at risk for two reasons theserelate both to asset quality and to the strict bank in-solvency legislation in Denmark. Reflecting this, thefive-year Danish USD CDS increased by 15bp to

88bp on Friday.

Emerging Markets:The emerging equities markets inAsia start the day with significant gains, with Chi-nese stocks in Hong Kong up 2% while Indias equ-ities markets rise by some 0.8%. The PMI data forChina were better than expected. The official PMIheld firm at 50.7 (50.2 projected), with domesticorder receipts up, but export orders down. Invento-ries and output also declined. At 49.3, the PMI pub-lished by HSBC was higher than the projected figureof 48.9. Conversely, at 53.6 the PMI for India fell

sharply from the previous 55.3.

CEE: The selling pressure on Italian and Spanishgovernment bonds (and the consequences for the re-financing markets for banks) is weighing on the CEand SEE region. Of the Emerging Market regions,these are the most dependent on external bank fi-nancing (including via Italy). Todays purchasing ma-nager index figures in Central Europe should indi-cate a cool down though still at a high level of over50 points. Among the various central bank meetingsthis week (Wednesday Romania, Thursday CzechRepublic), at least the latter might vote to raise inte-

rest rates (from 0.75% to 1%). The surprisingly strongincrease in inflation expectations in Poland (to 4.7%in July, after 4.2% in June) might motivate the cen-tral bank there to take another interest step this yearwhich is our baseline scenario. Serbia disclosed itwill first issue inflation-indexed bonds denominatedin dinar worth USD 200 million; afterwards it intendsto place USD 800 millions worth of USD-denomi-nated Eurobonds.

Market overviewcurrent 1T 52W H 52W L Ytd

Other interest ratesEUR

Eonia 0.97% 7.3 BP 1.7% 0.3% 15.5 BP





2Y Swap EUR 1.93% 2.5 BP 2.5% 1.1% 37.6 BP

3Y Swap EUR 2.05% -1.1 BP 2.8% 1.4% 16.2 BP

5Y Swap EUR 2.48% 1.6 BP 3.2% 1.6% -1.1 BP

10Y Swap EUR 3.14% 1.6 BP 3.8% 2.3% -18.6 BP

Other currencies

EUR/GBP 0.875 -0.1% 0.9 0.8 2.0%

EUR/HRK 7.461 0.0% 7.5 7.2 1.0%

EUR/RON 4.262 0.8% 4.3 4.1 -0.4%

EUR/SEK 9.021 -0.2% 9.5 8.7 0.4%

EUR/RUB 39.677 -0.1% 43.9 38.8 -2.9%

EUR/UAH 11.504 -0.1% 11.9 9.9 8.8%

EUR/TRY 2.437 1.3% 2.5 1.9 15.2%

EUR/BRL 2.231 -0.7% 2.4 2.2 0.4%

EUR/CNY 9.260 0.7% 9.7 8.5 4.7%

EUR/ZAR 9.588 -0.4% 10.0 8.7 7.4%

Bond market

2Y Bund EUR 1.16% -7.9 BP 1.9% 0.6% 29.8 BP

5Y Bund EUR 1.72% -10.2 BP 2.8% 1.2% -11.7 BP

10Y Bund EUR 2.54% -9.5 BP 3.5% 2.1% -42.5 BP

2Y US Treasury 0.38% 2.4 BP 0.8% 0.3% -21.5 BP



Interest rates CEE3M Pribor 0.8 0.0 BP 0.9% 0.8% -2 BP

3M Wibor 4.6 1.0 BP 4.6% 3.7% 76 BP

3M Bubor 6.1 0.0 BP 6.1% 5.3% 24 BP

10Y Czech Rep. 3.9 6.6 BP 4.2% 3.2% -1 BP

10Y Poland 5.8 -0.7 BP 6.4% 5.3% -26 BP

10Y Hungary 7.5 7.0 BP 8.4% 6.6% -45 BP

Equity markets CEE

Turkey (ISE Nat. 100) 62296 -0.4% 71777 57655 -5.6%

Croatia (CROBEX) 2174 0.6% 2338 1773 3.0%

Poland (WIG20) 2726 0.2% 2942 2373 -0.7%

Romania (BET) 5345 -0.4% 6099 5035 1.5%

Russia (MICEX) 1705 0.0% 1865 1328 1.0%

Serbia (BELEX15) 712 0.3% 829 600 9.3%

Czech Rep. (PX) 1175 -0.1% 1278 1107 -4.0%

Hungary (BUX) 21618 1.4% 24531 20147 1.4%

Commodities

WTI Oil USD/bbl 96.9 1.2% 115.6 76.9 2.7%

Fuel oil USD/mt 982.0 1.1% 1064.5 614.5 28.8%

Diesel USD/mt 997.0 -0.9% n.a. n.a. 26.2%

CO2 EUA Fut. EUR/mt 12.1 -2.3% 15.8 13.5 -15.9%

Silver USD/oz 39.4 -1.3% 49.8 17.7 27.3%

Platinum USD/oz 1795.8 0.9% 1886.5 1489.0 1.4%

Palladium USD/oz 836.5 0.6% 862.3 459.3 4.3%

Steel USD/mt 607.0 -1.8% 609.0 459.0 10.8%

Aluminium USD/mt 2624.0 -0.5% 2803.0 1982.3 6.2%

Copper USD/mt 9830.0 0.2% 10190.0 7028.3 2.4%

Prices as of 1 August 11, 07:59 a.m. (CET)Source: Bloomberg


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This report was completed on 1 August 2011

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Daily Comment RR 01Aug11

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