Sold Eur bln of 3% Apr 2022 OAT

Sold  Eur bln of 4.25% Oct 2017 OAT

Sold Eur bln of 3.25% Oct 2021 OAT

Sold Eur bln of 6% Oct 2025 OATfrance

Very marginally weaker than Reuter’s median forecasts of +0.6%, +3.4% respectively.

I gotta ask ya; does anyone give a shit?

EUR/USD sits at 1.3141, precisely 2 pips lower than when I sat down four and a half hours ago….

Glad they agree on something….

• Yuan’s supply, demand situation has changed
• Yuan has seen two-way movement since August, September 2011
• China’s current account surplus has declined by large margin
• China should liberalize interest rates gradually
• No clear timetable for interest rate liberalization

Sold Eur 979 mln of 4% July 2015 Bono, yield 4.037% (from 2.617%), cover 2.88 (from 2.37)

Sold Eur 764 mln of 3.8% January  2017 Obligacion, yield 4.752%, cover 3.69 (from 2.7)

Sold Eur  773 mln of 5.5 July 2017 Obilgacion, yield 4.960 % , cover 3.14

Full take up but high yields weighing a bit on EUR which is slipping back to session lows around 1.3135.

Demostrably worse than expectations of Reuters median forecast of 54.2

UK Service expectations PMI 72.6 in April from 71.3 in March- Highest since March 2010

 Small dip in cable of around 10 pips on the reaction before settling again around 1.6175

–Adding Detail To Version Transmitted At 0853BST/0753GMT
–Reasonable To See Steady, Slow Recovery Through 2012
–Balance Struck On Pace UK Fiscal Tightening ‘Perfectly Sensible’

LONDON (MNI) – Bank of England Governor Mervyn King said today
there are ‘indeed’ signs of an economic recovery emerging in the UK
economy.

“It’s a patchy picture but there are indeed signs of a recovery
coming and we see that in the business surveys and the employment data,
so I think a reasonable view would be that we will start to see a
steady, slow recovery coming during the course of the year,” King told
BBC Radio 4′s Today Program.

King also said that there had by necessity been a “balance” struck
on the pace and timing of the UK’s deficit reduction strategy, which was
a “perfectly sensible” one.

The rise in commodity prices around the world rather than austerity
had been the main cause of the UK’s disappointing growth performance in
recent years.

“The balance that was struck was a perfectly sensible one, you can
argue at the margins. We’ve been disappointed in the last couple of
years by the extent to which energy and food prices around the world
have gone up, that’s squeezed real take home pay here in the UK,
depressed consumer spending and led to the economy basically being flat
for 18 months,” King said.

“We had to rebalance our economy because we had a trade deficit,”
King added.

The fall in sterling had been a key element in the BOE/government
strategy of rebelancing the economy and had helped UK exporters regain
competitiveness.

“What I think the fall in sterling will achieve is that there are
many companies up and down the United Kingdom that are finding it much
easier now to export than was the case before and indeed to produce as a
substitute for things that we previously imported,” King said.

Turning to discuss the issue of pay in the financial services
sector, King said that it was not his job to decide the appropriate
level of pay for bankers.

“It’s not for me to decide what is the appropriate salary of
people. The question we ought to be asking ourselves is why does the
banking industry as a whole want to pay these large bonuses?” King said.

The key to the problem was the implicit taxpayer guarantee to the
large banks, King said.

“I think part of the reason is because as taxpayers we have given
them a guarantee and that’s worth a lot of money to them because they
can borrow more cheaply and that’s the money being used to fuel and
drive these very large bonuses,” King added.

King refused to get drawn into a discussion of his potential
successor as Bank of England governor and rejected ideas that he might
have been “too academic” a central bank governor.

“Any conversations I have on that subject will be held in private
with the Prime Minister and the Chancellor,” King said.

–London newsroom: 4420 7862 7491; email: ukeditorial@marketnews.com

[TOPICS: M$$BE$,M$B$$$]

EUR/USD:  Offers 1.3160/70 and 1.3190/00. Tech support 1.3118 (100 SMA), bids 1.3100/10, stops below ahead of  bids 1.3075/85 (barrier 1.3075)

GBP/USD: Bids 1.6150/60 with sell stops down through 1.6150 ahead of more bids at 1.6100/10. Offers sit up at 1.6200/10

EUR/GBP: Offers 0.8150/55, Bids 0.8110/15 and 0.8100/05 (barrier 0.8100)

USD/JPY: Bids 80.00/10, sell stops through 79.90, larger bids expected 79.50/60 (Kampo/BOJ). Exporter offers 80.40/50

EUR/JPY: Offers 105.80/00, bids 105.30/40 ahead of more 105.00/10 and sell stops through105.00 (barrier). NB: 105.42 – 200day SMA, 104.49-100 day SMA

AUD/USD: Bids 1.0285/90 (Sovs, real money, exporters), Sell stops through 1.0275 ahead of more bids 1.0255/65, more sell stops through 1.0250  ahead long term  up trendline support at 1.0240  and  a barrier at 1.0200. Offers 1.0330/40

NZD/USD: Bids 0.8040/45 and  0.8000/10 ahead of barrier (0.8000).  Tech res 0.8105/10. Watch for daily close under 200 day SMA around 0.8064

USD/CHF: Bids 0.9120/25 and 0.9080/85 and 0.9045/50(SNB).  Offers 0.9150/55

EUR/CHF:  Bids (SNB)1.2000/15, offers 1.2020/25

GERMANY DATA: March machine orders -4%; February -16%; January -6%: VDMA
– VDMA: March domestic machine orders -9% y/y;foreign orders -2%
– VDMA: January-March total orders -9% y/y;domestic -10%; foreign -8%
– See MNI MainWire for details

–Reasonable To See Steady, Slow Recovery Through 2012
–Balance Struck On Pace UK Fiscal Tightening ‘Perfectly Sensible’

LONDON (MNI) – Bank of England Governor Mervyn King says there are
‘indeed’ signs of an economic recovery emerging in the UK economy.

“It’s a patchy picture but there are indeed signs of a recovery
coming and we see that in the business surveys and the employment data,
so I think a reasonable view would be that we will start to see a
steady, slow recovery coming during the course of the year,” King told
BBC Radio 4′s Today Program.

King also said that there had by necessity been a “balance”
struck on the pace and timing of the UK’s deficit reduction strategy,
which was a “perfectly sensible” one.

The rise in commodity prices around the world rather than austerity
had been the main cause of the UK’s disappointing growth performance in
recent years.

“The balance that was struck was a perfectly sensible one, you can
argue at the margins. We’ve been disappointed in the last couple of
years by the extent to which energy and food prices around the world
have gone up, that’s squeezed real take home pay here in the UK,
depressed consumer spending and led to the economy basically being flat
for 18 months,” King said.

“We had to rebalance our economy because we had a trade deficit,”
King added.

–London newsroom: 4420 7862 7491; email: ukeditorial@marketnews.com

[TOPICS: M$$BE$,M$B$$$]

Is that why the Giant Panda has such a stranglehold on EUR/USD?

• China will contribute to resolving Europe’s economic woes

Well bless their little cotton socks…….

And I’ll keep buying their cheap, crappy goods.

BRUSSELS (MNI) – EU finance ministers failed to agree a common
position on legislation designed to implement the Basel III bank capital
rules, despite talks that ran into the early hours of Thursday morning.

The ministers postponed the target date for a deal to May 15.

Although progress was made on key areas such as allowing national
authorities to set higher-than-minimum capital levels, disagreement over
the need for a common EU definition of capital prevented the ministers
from finalising a common position for upcoming negotiations on the rules
with the European Parliament.

Under a compromise text drafted by Denmark, the current holder of
the EU council’s rotating presidency, national authorities would be able
to impose an additional capital requirement of 5% on banks’ domestic and
non-EU exposures, and a capital surcharge of up to 3% on their total
exposure.

National discretion would be subject to “a sort of European
mechanism so that everyone knows what you are doing but basically you
can do it,” Danish economy minister Margrethe Vestager explained.

According to the draft amendments, obtained by MNI, EU finance
ministers would be given the final say on whether such decisions should
be permissible, but they would only examine the issue if objections are
raised by either the European Banking Authority, the European Systemic
Risk Board or the European Commission.

EU Internal Markets Commissioner Michel Barnier blamed the UK for
blocking a final deal but said that the Commission also had objections
to the 700 page draft. The mechanism giving ministers the final word
over the acceptability of supplementary capital levels did not comply
with EU law, which gives the European Parliament joint responsibility
over the rules, he said.

Securing some flexibility on capital levels for national
authorities represents a victory for the UK, but Europe’s most important
financial centre appeared isolated when George Osborne, Chancellor of
the Exchequer, revealed in a heated moment of the public debate that he
had been unable to secure a single bilateral meeting with the Danish
presidency during 10 hours of talks to put forward his main concerns.

The Danish presidency also shot down UK demands to review
provisions in the legislation that would effectively allow bank
conglomerates to count the capital held in their insurance units for
their overall capital levels as well. As a result, the issue will not be
revisited in the talks later this month, sources told MNI.

The UK is championing a bigger role for the European Banking
Authority in defining common EU definitions for capital, arguing
alongside the ECB and EBA itself that the absence of common rules
undermines the credibility of the EU’s entire approach to implementing
Basel III across the EU’s 8,300 banks.

“We need a European solution to what the rest of the world views as
a European problem,” Osborne argued, warning that markets would not
cease to be “wary of investing in Europe and European banks” if
ministers failed to faithfully implement the Basel III rules.

Earlier in the day EBA chairman Andrea Enria revealed estimates
that the two most distant definitions of core tier one capital being
proposed by finance ministers could lead to a 300-bp difference in
banks’ capital requirements, an amount he said was “really not something
we can live with”.

A number of EU governments, including Germany, are concerned that
common EU definitions might end up excluding some nationally important
forms of capital that play a large role in some countries’ banking
sectors, an issue that became apparent in the EBA’s stress tests last
year, when German savings bank Helaba withdrew from the tests over that
issue.

Europe’s banking sector fragilities are dangerously intertwined
with the crisis in sovereign debt markets as banks lean on their
governments for support and markets fret over governments’ ability to
support them.

Osborne said the rules on bank capital could have “a bigger impact
on our economies than anything else we’ve talked about over the last two
years”.

Poland’s finance minister Jacek Rostowski said that the EU needed
to be just as tough on preventing future banking crisis has it has been
in seeking to prevent further fiscal crises.

–Brussels Newsroom, +324-952-28374; pkoh@marketnews.com

[TOPICS: M$X$$$,MGX$$$,M$$CR$,MT$$$$]

• Further delay risks inconsistencies among euro states
• Rollout of standards needs legislative, institutional change in G20
• Banks must drop problem assets, develop strong business models
• Financial institutions must be able to exit competition without causing turmoil

Dow Jones reporting.

Cable’s been wrapped up in a 1.6172-99 range so far today.

There’s talk of bids 1.6150/60 with sell stops down through 1.6150 ahead of more bids at 1.6100/10. Offers sit up at 1.6200/10

The April Services PMI data is out at 0830GMT with expectations of 54.6 from 55.3 in March.

Cable’s sitting at 1.6180.

LONDON (MNI) – The EONIA (European Over-Night Index Average) swap
curve is implying around a 6.5% chance of a 25 basis point rate cut at
the European Central Bank’s Governing Council meeting Thursday.

Speculation of an ECB rate cut has increased following renewed
tensions in the Eurozone peripheral bond markets and amid weak data that
shows a number of EMU countries have officially slipped back into
recession.

EONIA also shows a one in three chance that rates will be 25 basis
points lower by the end of the year.

The following table shows the rate cut probabilities assigned by
the EONIA curve ahead of ECB President Mario Draghi’s press conference
later today, for each month from May until December of this year. Each
100 basis point of probability equals a rate cut of 25 basis points.

Month Rate Prob (25bps cut)
—- —– —————–
May 0.327% -6.5%
June 0.301% -17.0%
July 0.284% -24.0%
August 0.279% -26.0%
September 0.285% -23.0%
October 0.257% -34.0
November 0.259% -34.0%
December 0.266% -31.0%

– London newsroom: 00 44 20 7862 7435; mchrysostomou@marketnews.com

[TOPICS: MT$$$$,M$$CR$,M$X$$$,M$$EC$]

The only two muppets who think the ECB could trim rates later today?

It wouldn’t surprise me at all, but there we go.  We’ll see in due course, as we always do.

The least we can expect is for Draghi’s press conference comments to have a pretty dovish tone. 

EUR/USD unchanged since I got in, presently at 1.3145.

The “Bird” has been the main mover in Asia overnight with a sharp drop on the back of a rise in jobless over Q1 to 6.7% from 6.3%. Falling dairy prices aren’t helping either, and the recent employment data may well put pressure on further OCR cuts from the RBNZ.

The 200 day SMA comes in around 0.8064 and a close below here tonight will likely increase the pressure and a test of the psychological 0.8000 level which also holds a barrier,.. so likely decent bids just ahead of it. We ‘ve hit a low of 0.8040 following the early data release.

NZD/USD’s sitting around 0.8048

Spain taps 4.00% July 2015 bono, 3.8% January 2017 obligacion and 5.5% July 2017 obligacion.

Target amount 2.5-3.0 bln euros

Results circa 08:40 GMT

France taps 4.25% October 2017 OAT,  3.25% October 2021 OAT, 3.0% April 2022 OAT and 6.00% October 2025 OAT.

Target amount 6.5-7.5 bln euros

Results due circa 09:00 GMT.

LONDON (MNI) – UK house prices fell once again on the month in
April, declining 0.2% following a 1% drop in March.

This was the fourth monthly fall in five months, pushing the
average house price down from Stg165,798 last November to Stg164,134 in
April. Nationwide said the expiry of the stamp duty holiday in March was
probably hitting housing market activity and warned that neither
prices nor activity were likely to pick-up sharply any time soon.

In April, house prices were down 0.7% on a three month on three
month basis, following 0.5% and 0.1% falls on the same basis in February
and March.

Prices were down 0.9% on the year in April, the same rate as in
March.

Much of the recent softness in measures of housing market activity
and house prices is likely to relate to the expiry of the stamp duty
holiday in late March,” Robert Gardner, Nationwide’s Chief Economist,
said.

“This effect should fade in the months ahead … However, the
challenging economic backdrop suggests that a significant acceleration
in prices or activity is unlikely in the near term,” he added.

The stamp duty (property transaction tax) holiday was introduced
in April 2010 and lasted until March 24 this year, with those buying a
first home for less than Stg250,000 exempted from the tax.

A raft of surveys have lent support to the view activity picked up
before the expiry and there are signs it has tailed away after it.

–London newsroom: 4420 7862 7491; email drobinson@marketnews.com

[TOPICS: MABDA$,MABDS$]

Data for April has come in at -0.2% m/m, -0.9% y/y, demonstrably weaker than median forecasts of +0.4%, -0.3% respectively.

Nationwide expect house prices to be flat, or “modestly” lower over next 12 months.

For the NY1000EDT/1400GMT cut.

Nearby ones include..

EUR/USD: 1.3000, 1,3050, 1,3080, 1.3100, 1.3150, 1.3190, 1.3200 and 1.3250

USD/JPY: 80.50, 80.75, 81.00  and 81.50

AUD/USD: 1.0275, 1.0350 and 1.0400

GBP/USD: 1.6160, 1.6200, ad 1.6285

USD/CHF: 0.9125 and 0.9150