Reuters Insider - European Close: U.S. Payroll Numbers Spark Volatile Trading
13/06/2016 11:07
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Source: Thomson Reuters
Description: European stocks end broadly flat after surprises
in the latest U.S. jobs data unleash volatile
trading across all asset classes. In the euro
zone, CDS spreads widen ahead of a weak of heavy
issuance.
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Transcript (May be auto-generated)
It's 1630 GMT. Surprises in the latest US jobs data unleashed volatile trading
across all markets. The headline jobs figure of 103,000 comes in well below the
175,000 forecast but the unemployment rate falls sharply to 9.4% The mixed
picture send short-dated US bond yields lower but the Dollar shrugged off
initially losses to print a fresh four-month high against the Euro. Gold
rebounds from six-week lows as risk averse investors cover extended short
positions but gold still down over 3% on the week, its steepest fall since early
July. And US shares reverse course and head lower in early trade. European
stocks end the day down too with bank sharply underperforming. Okay, and now
after the jobs report, Fed Chairman Ben Bernanke began testifying before the
Senate Budget Committee. Bernanke says the US recovery is continuing but could
be, but it could be in peril if unemployment fails to come down sequentially.
Considerable time likely would be required before the unemployment rate has
returned to a more normal level. Persistently high unemployment by damping
household income and confidence could threaten the strength and sustainability
of the recovery. Also in Washington today, the White House is expected to name
Gene Sperling to replace Larry Summers as the new Head of the National Economic
Council. Sperling has held the job before; he was NEC Chief under President Bill
Clinton and is currently a councilor to Treasury Secretary Tim Geithner. In the
Euro zone, peripheral CDS spreads are widening again as the prospect of a heavy
week of issuance sets nerves jangling around EUR25 billion of supply on the
block including five-year bonds from Germany and Spain on Wednesday and
Thursday. But Reuters Fixed Income Analyst Vincenzo Albano says Wednesday's
auction in Portugal could be the one to watch. Yields in Portugal are in line
with the previous auctions. The bonds being auctioned this Wednesday were issued
respectively 25 basis points and 50 basis points below secondary market levels.
And in both cases, the Portuguese debt agency issued less than the lower range
of EUR750 million indicating that ultimately they were not compelled to borrow
the entire bid amount. And in fact looking at this month's cashflows, on January
21st, there is a large redemption of EUR3.4 billion T-bills while announced
issuance is for a maximum amount of EUR2.5 billion, part with bonds and part
with new T-bills. That leaves about EUR900 million net liability decrease. Okay,
looking ahead at the other risk events next week; Bank of England and European
Central Bank policy meetings are the main events both on Thursday. Also look out
for a statement by ECB President Jean Claude-Trichet on Monday following the
Bank for International Settlement Summit over the weekend. It's a relatively
quiet start to the week for data. UK trade figures, European zone industrial
production figures, and full-year 2010 German GDP likely to be closely watched
on Wednesday. But a heavy US data day on Friday. The highlights being December's
retail sales and CPI reports. On the political front, China's Vice Premier
visits the UK from Monday; trade and business deals likely to be on the agenda
after a spate of similar agreements with France and Germany this week. Okay,
that's all for now. But stay with us for updates on the hour. I'm Darcy Lambton
and this is Reuters