Reuters Insider - Inside the News: French Bond Sale to Meet Strong Demand
13/06/2016 11:06
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Source: Thomson Reuters
Description: France's sale of up to 9 billion euros of debt is
expected to see good demand although the nation is
seen as a weak link among Europe's AAA-rated
nations, says Reuters Treasury Editor Jamie
McGeever.
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Transcript (May be auto-generated)
0900 GMT. Confidence in the US economy boosts appetite for riskier assets.
Record ADP private payrolls prompt economists to revise forecasts ahead of
Friday's crucial nonfarm payrolls report. European shares are edging higher in
early trade. FTSEurofirst 300 up 0.5%. Banks are the main gainers. KBC bucking
the trend. It is, its shares are down over 3% after announcing one-off
provisions of between EUR315 million and EUR330 million for its Irish loan book.
Oil is holding above $90 a barrel. US jobs data boosting optimism in commodity
markets. Dollar Index holding near a one-week high. The Euro flat near trend
line support at 1.3110.
Some buying by model funds seen in early trade this morning. The Greenback
taking a bit of a breather against the Yen after its biggest one day rise in
over three months. BarCap Currency Strategist David Forrester says it will take
a big surprise on the US jobs front to get him excited. It usually takes a lot
of improvement in the unemployment rate, i.e. a lower unemployment rate to get
the Fed to actually start tightening rates or reducing stimulus. And they've
indicated that much this week in its FOMC minutes. So we're not going too
excited about Dollar-Yen at around these levels. Bunds opening lower, extending
Wednesday's sell-off.
France expected to sell up to EUR9 billion worth of paper this morning. With all
the details on that, Jamie McGeever in the newsroom. Jamie. Yes as you said
Axel, we have France to sell up to EUR9 billion of 10-, 15-, and 20-year bonds
auction later today. That's a hefty supply, that's more than double the near
EUR4 billion of bunds that Germany sold yesterday. But analysts say dealer
demand is strong and in fact France has a good track record in attracting
primary dealers to its auctions. Auctions in the last few months have
consistently drawn higher demand than, say, German sales. So as we've also
discussed this week, there's some EUR23 billion of redemptions in the Euro zone
this week. So investors clearly have a cash pile to reinvest in the market. So
what happens post-auction, well spreads may now, as you say, bunds continue to
sell off. And Germany still looking quite rich, many analysts say. On the other
hand, France is widely seen as the weak link amongst the AAA Euro zone nations.
And as, the bond market is lagging behind the CDS market, CDS is, French CDS
places much higher than say Austria. So spreads could widen a little if the bond
market plays catch up with them, the CDS. Okay. Thanks a lot Jamie. Britain's
Finance Minister George Osborne calling on Europe to put its House in order in
2011. Writing in the Financial Times today, Osborne says Europe must restore
confidence in the Euro and sort out its fragile banking system that's holding
back growth and recovery. Meanwhile China's Vice Premier says it will buy as
much as, as much Spanish debt as it has of Greece and Portugal combined,
according to Spain's El Pais newspaper. That would be about EUR6 billion.
Microsoft teaming up with Britain's ARM Holdings to take on Apple in tablets and
smartphones. The move marks Microsoft's biggest step away from a long-standing
alliance with Intel. Chief Executive Steve Ballmer pitched the move in his
opening address at the Consumer Electronics Show in Las Vegas. ARM shares up
over 10% this morning. As well as tablets, 3D TV is the other big draw in Vegas.
Samsung and LG have unveiled a bigger, thinner and more affordable models as
they hope that will spur demand for technology that has so far seen weak sales.
The need for special glasses is seen as a hindrance, something Japan's Toshiba
hopes to rectify with the introduction of glasses free sets. That's it. Coming
up, UK services PMI data exclusively two minutes ahead of the market here on
Insider at 0928 GMT, plus news updates on the hour. I'm Axel Threlfall. This is
Reuters