December 20th, 2010 15:56:55 GMT

Be extremely careful…

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We’re getting reports of wickedly illiquid markets out there.  Small orders that usually bounce off the market like flies off an elephant are moving things beyond belief… That’s great when it is moving in your direction but not so nice when it is against you.

Stay small and don’t get greedy…

5 Comments

December 20th, 2010 15:41:05 GMT

Moody’s reviews Spanish Banks too

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The cycle goes on. Following last week’s ratings review of Spain, the banks are now being reviewed by Moody’s. Like night follows day…

EUR/USD is probing the 200-day moving average1.3060 is support if that level gives way.

CORRECTION: I mistakenly said “downgraded” in the initial post. I should have said “placed on review for a downgrade”.

6 Comments

December 20th, 2010 15:35:16 GMT

MNI US Retail Trade Weekly Index 64.2 Thru Dec 18 vs 66.2

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By Mark Pender

NEW YORK (MNI) – MNI’s U.S. retail trade index slipped back two
points from the prior period’s record high, to a 64.2 level in the Dec.
18 period that indicates strong but not accelerating year-on-year
growth, according to the results of Market News International’s weekly
survey.

Total sales are at an on-year +5.0% with same-store sales
especially strong at +4.4%. Readings are near records in six years of
data.

On-year sales were extremely strong in last week’s retail sales
report from the government, at an adjusted +6.3% for the ex-auto ex-gas
category.

Despite all the strength, chains have not been raising guidance
which is still pointing to a slight slowing through the holidays.

MNI data, when adjusted, are currently pointing to a half
percentage point dip for the December retail sales print.

Upward revisions to seasonal factors held back what would have been
even stronger adjusted gains in the government’s data for November.

Adjustments for November’s clothing & accessories, an important
component making up 6% of total sales, and sporting goods, a small
component, proved much more severe than the initial adjustments.

Clothing & accessories look to get a give back in December where
the adjustment, at least in the initial set, is the most generous in 18
years of data.

An offset is the toughest adjustment in three years for the key
general merchandise component which makes up 14% of total sales. General
merchandise showed unusual strength in November, up 1.3% in a gain that
further makes the December comparison an uphill battle.

Income guidance is lagging sales guidance, a mismatch that points
to markdowns. Income is an on-year +8% with one third of the sample
posting significant declines.

MNI’s sample in the latest period numbers 165 chains representing
138,100 individual retail locations.

Editor’s Note: MNI compiles its retail trade index based on a
weekly sample of company news and data.

** Market News International New York Newsroom: 212-669-6430 **

[TOPICS: MDURE$,MT$$$$,M$U$$$,M$UEQ$,MAUDS$]

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December 20th, 2010 15:27:11 GMT

EUR/USD makes new low…everybody’s asking…

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I’m asking them, they’re asking me…no one has seen one reason for the fresh EUR weakness beyond the standard “more sellers than buyers…”

Weaker EU consumer confidence, on going sovereign debt woes and reversal to the downside in the price of oil are some of the anecdotes traders are eying.

1.3102 is the 200-day moving average, which could provide some modest support. We’ve been as low as 1.3108.

Decent size spec selling of GBP/USD has been noted in the last few minutes, traders report.

UPDATE at 15:32: Custody ban says they are seeing steady selling of EUR/USD from clients…

3 Comments

December 20th, 2010 15:17:15 GMT

JCT eases up on bond buys

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The ECB bought only EUR 600 mln in bonds last week, after buying 2.7 bln the week before.

Yields are edging up this morning as sovereign debt woes weigh heavily on the euro.

Spain, the big dog in the sovereign debt spotlight, finds its 10-year bonds yielding 260 bp more than comparable German debt. That’s the highest level since the first of December.

1 Comment

December 20th, 2010 15:05:28 GMT

EMU Dec Consumer Morale Unexpectedly Fell 1.6 Points To -11.0

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PARIS (MNI) – Eurozone consumer sentiment unexpectedly eroded in
December after six months of improvement, according to the flash
estimate released Monday by the European Commission.

After a steady rise from the recent low of -17.8 at the outset of
the Eurozone’s sovereign debt crisis in May, the sentiment index fell
back 1.6 points to -11.0, retracing two months of gains. The long-term
average is -12.5. Most analysts had expected a further modest rise.

November’s 1.5-point gain reflected growing optimism about the
overall economy and a marked drop of unemployment fears in Germany. With
their financial situation improving and hopes for further gains,
households said they were spending more for big-ticket items and
expected to do so over the coming year as well, although the latter
component remained well below average everywhere except in Germany and
Finland.

The definitive figure for December should be released on January 6
as a component of the Commission’s comprehensive economic sentiment
survey.

–Paris newsroom +331 4271 5540; e-mail: stephen@marketnews.com

[TOPICS: M$XDS$,M$X$$$]

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December 20th, 2010 14:55:43 GMT

ECB Weekly Bond Buys Slow To E603 Mln In Week Ended Dec 17

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FRANKFURT (MNI) – The European Central Bank slowed its purchases of
sovereign EMU debt last week to E603 million on bonds that settled by
last Friday, the ECB announced Monday.

The figure was well down from the E2.667 billion in purchases made
the week prior and is in fact the lowest amount settled since October,
during which time the central bank had make only E9 million in bond
buys.

The bond purchases made over the past week brought the total amount
of bond buys to 72.5 billion, rounded to the nearest half-billion, which
the ECB said that it would reabsorb in a quick tender to collect
one-week term deposits.

The operation, to be conducted on Tuesday at 10:30 GMT, will be in
the form of a variable-rate tender with a maximum bid rate of 1.00%, the
bank said. The liquidity will be held for one week at the bank as a term
deposit. The fixed-term deposits can be used as collateral in the
Eurosystem’s credit operations.

The central bank also said it intends to hold another
liquidity-absorbing operation next week.

– Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com –

[TOPICS: MGX$$$,M$X$$$,M$$EC$]

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December 20th, 2010 14:46:21 GMT

New York Fed Excerpt: Alters 35% Rule for Treasury Purchases

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–To Exceed 35% Buys In Increments Until Reach 70%

NEW YORK (MNI) – The following updated table was issued by the New
York Federal Reserve Bank Monday morning, detailing how purchase limits
for individual securities have been altered “to help ensure that the
Open Market Desk’s purchases do not impair the liquidity of individual
securities:”

How much will the Desk purchase in each issue?

To provide operational flexibility and to ensure that it is able to
purchase the most attractive securities on a relative-value basis,
effective November 10, 2010, the Desk temporarily relaxed the 35 percent
per-issue limit on System Open Market Account (SOMA) holdings under
which it had been operating. However, SOMA holdings of an individual
security will be allowed to rise above the 35 percent threshold only in
modest increments, as specified in the table below. Subject to market
conditions, the Desk may further limit the size of additional purchases
in certain issues or otherwise change the stated limits as needed.

SOMA Security Ownership Maximum Purchase Amount per Security
Prior to Operation as a in Operation is the Lesser of:
Percentage of Outstanding
Issuance (A) (B)

0-30% N/A (35% of Outstanding
Issuance) minus SOMA
Holdings

30%-47.5% 5% of (50% of Outstanding
Outstanding Issuance) minus
Issuance SOMA Holdings

47.5%-59% 2.5% of (60% of Outstanding
Outstanding Issuance) minus
Issuance SOMA Holdings.

59%-70% 1% of (70% of Outstanding
Outstanding Issuance) minus
Issuance SOMA Holdings

Above 70% Not Eligible for Purchase

As previously announced:

Has the Federal Reserve changed its 35 percent per-issue holding
limit?

Yes, to provide operational flexibility and to ensure that it is
able to purchase the most attractive securities on a relative-value
basis, effective November 10, the Desk is temporarily relaxing the 35
percent per-issue limit on System Open Market Account (SOMA) holdings
under which it has been operating. However, SOMA holdings of an
individual security will be allowed to rise above the 35 percent
threshold only in modest increments.

Specifically, once the SOMA’s holdings of a security reach 30
percent of the outstanding amount, additional purchases of the given
security will generally be capped at 5 percent of the total outstanding
issue size in each subsequent operation. Subject to market conditions,
the Desk may further limit the size of additional purchases of these
issues.

1. Example: If the SOMA holds $3.2 billion of a $10 billion issue
($3.2 billion held by the SOMA, $6.8 billion held by others), given that
the SOMA’s 32 percent holdings exceed 30 percent of the total
outstanding issue size, purchases in each subsequent operation would be
limited to $500 million or less, depending on market conditions.

** Market News International New York Newsroom: 212-669-6430 **

[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$]

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