Notes/Observations
Fiscal Cliff: Differences narrow as President Obama made counter-offer to House speaker Boehner that moved top tax threshold to $400k from $250k and included $1.2B revenues and $1.2B spending cuts; would increase debt ceiling for 2 years with periodic votes.
Boehner Aide stated that the President's new offer still not balanced but was a step in the right direction
ECB's Mersch: against a rate cut; He did not understand talk about a rate cut because unconventional monetary policy was working best right now.
India keeps all key rates steady
Sweden Central Bank (Riksbank) cut the Repo Rate by 25bps to 1.00%; as expected
Spanish borrowing costs again fall at 3-month and 6-month bill auction; results seen as solid
Dramatic weakening of HUF currency this week might alter planned Hungary Central Bank rate cut
USD Index at 2-month lows
Economic Data
(HU) Hungary Oct Avg Gross Wages Y/Y: 4.6% v 3.4%e
(EU) ECB: €520.0B borrowed in overnight loan facility vs. €262M prior; €249.0B parked in deposit facility vs. €225.1B prior
(SE) Sweden Central Bank (Riksbank) cut the Repo Rate by 25bps to 1.00%; as expected
(HK) Hong Kong Nov Unemployment Rate: 3.4% v 3.4%e
(ES) Bank of Spain Sept Bad Loan Ratio 11.2% (record) v 10.7% m/m
(UK) Oct ONS House Price Y/Y: 1.5 v 1.7% prior
(UK) Nov PPI Input M/M: 0.1% v 0.1%e; Y/Y: -0.3% v -0.1%e
(UK) Nov PPI Output M/M: -0.2% v +0.2%e; Y/Y: 2.2% v 2.5%e
(UK) Nov PPI Output Core M/M: 0.0% v 0.1%e; Y/Y: 1.4% v 1.5%e
(UK) Nov CPI M/M: 0.2% v 0.2%e; Y/Y: 2.7% v 2.7%e; Core CPI Y/Y: 2.6% v 2.7%e
(UK) Nov RPI M/M: 0.0% v 0.2%e; Y/Y: 3.0% v 3.2%e; RPI-Ex-Mortgage Interest Payment Y/Y: 2.9% v 3.1%e; Retail Price Index: 245.6 v 246.2e
(IT) Italy Oct Current Account: -€245M v -€2.6B prior
(IS) Israel Dec Inflation Forecast: 1.8 v 1.9% prior
(IS) Israel Nov Money Supply Y/Y: 7.1% v 10.3% prior
Fixed Income
(ES) Spain Debt Agency (Tesoro) sold total €3.53B vs. €2.5-3.5B indicated in 3-Month and 6-Month Bills (Nov 27th)
Sold €1.58B in 3-month Bills; Avg Yield: 1.195% v 1.254% prior; Bid-to-cover: 2.92x v 3.52x prior; Max Yield: 1.270% v 1.300% prior
Sold €1.95B in 6-month Bills; Avg Yield: 1.609% v 1.669% prior; Bid-to-cover: 2.57x v 2.3x prior; Max Yield: 1.688% v 1.710% prior
(GR) Greece Debt Agency (PDMA) sells €1.3B vs. €1.0B indicated in 13-week Bills; Avg Yield 4.11% v 4.20% prior; Bid-to-cover: 1.73x v 1.66x prior
(EU) ECB allotted €72.7B vs.€75Be in 9-Day Main Refinancing Tender at fixed 0.75%
(HU) Hungary Debt Agency (AKK) sold HUF75B vs. HUF50B indicated in 3-Month Bills; Avg Yield % v 5.77% prior; Bid-to-cover: x v 2.02x prior
Equities
Indices: FTSE 100 +0.40% at 5,936, DAX +0.60% at 7,646, CAC-40 +0.10% at 3,641, IBEX-35 +1% at 8,123, FTSE MIB +0.40% at 16,069, SMI +0.30% at 6,920, S&P 500 Futures +0.40% at 1,433
European equity indices have tracked Monday's gains in the US equity markets, as traders continue to focus on the evolving "fiscal cliff" talks. Today's gains have been led by Spain's IBEX-35, while the DAX has hit another fresh 2012 high. European banks are mostly higher, led by Commerzbank and Unicredit. However, Greek banks are lower by over 4% once again on today's session, amid capital concerns. Additionally, the Bank of Cyprus said that it would cancel a coupon payment on certain convertible notes. In other banking news, Spain's bad loan ratio hit another record high in Oct. Resources related firms are mostly higher, tracking the gains in oil prices.