Party pooper

• WTO cuts 2012 World trade forecast to 2.5% from 3.7%……..BUMMER

• Sees no German resistance to ECB supervision plan

Determined not to be made a fool of, Perfect Pete has backed up the truck and bought EUR/USD heavily.

Just joking

Talk is it’s a classic Middle Eastern sovereign drive by…..

We’re up at 1.3030 where sell orders were said to be clustered earlier (1.3030/50)

-Aug PSNB-X Stg14.41bn vs Stg14.365bn in Aug 2011

LONDON (MNI) – Public sector net borrowing stood at a record level
in August as receipts growth continued to disappoint, figures from
National Statistics showed Friday.

While PSNB came in a little under the median forecast, the
underlying picture is one of weak revenue growth which suggests
Chancellor of the Exchequer will be forced to revise up his full-year
borrowing forecasts in the Autumn Statement later this year.

Public Sector Net Borrowing excluding financial sector
interventions stood at Stg14.41 billion in August, compared with
Stg14.365 billion in the same month a year earlier. This was the highest
August borrowing on record, albeit slightly under analysts’ expectation
for a Stg15.5 billion figure.

The political and economic fallout from the Chancellor having to
revise his borrowing forecasts and probably abandon his debt target was
partially diffused last night as Governor of the Bank of England Mervyn
King gave approval to higher borrowing due to weaker than expected
growth this year.

In the first five months of the financial year, net borrowing stood
at Stg31 billion compared with Stg48.4 billion in the same period in
2011. This, however, is flattered by a one off transfer of Royal Mail’s
pension assets. Excluding these then borrowing stood at Stg59 billion
for the financial year to date, up 22% on last year.

The main problem is revenue growth which has been hit by poor
economic growth. For the financial year to date revenue growth stood at
just 0.4% in August, compared with the full year forecast of 3.9%. In
contrast, spending during the same period is up 3%, a little below the
3.5% forecast.

The Office for Budget Responsibility diplomatically said last month
that it was too early to see if the full year borrowing forecast would
be met or not. Expect to see the question sidefooted again later today
with their monthly assessment, but the writing appears to be on the wall
for the Chancellor’s Budget predictions.

Not even the Olympics could help the Chancellor significantly with
ticket sales likely boosting revenues by around Stg0.5 billion, with
that revenue attributed to July, August and September.

–London bureau: 0044 20 7862 7491; email: puglow@marketnews.com

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

UK DATA: Aug Borrowing At Record High On Low Receipts
-Aug PSNB-X Stg14.41bn vs Stg14.365bn in Aug 2011
————————————————————————
Public sector net borrowing stood at a record level in August as
receipts growth continued to dissapoint, figures from National
Statistics showed Friday. While PSNB came in a little under the median
forecast, the underlying picture is one of weak revenue growth which
suggests Chancellor of the Exchequer will be forced to revise up his
full-year borrowing forecasts in the Autumn Statement later this year.
Public Sector Net Borrowing excluding financial sector interventions
stood at Stg14.41 billion in August, compared with Stg14.365 billion in
the same month a year earlier. This was the highest August borrowing on
record, albeit slightly under analysts’ expectation for a Stg15.5
billion figure.

FRANKFURT (MNI) – European Union officials are working with the
Spanish government to craft a new reform program that would include
measures official sector creditors would require as part of an aid deal
with Europe’s bailout fund, the Financial Times reported on Friday.

Such an aid package would be intended largely to allow Spain to
benefit from the European Central Bank’s new OMT bond purchasing
program. The goal is to have the reforms in place before Madrid makes a
formal bailout request, so that politically it does not look like the
measures are being imposed on the government, the paper wrote.

The new reforms could be unveiled as early as next week.

Citing officials involved, the paper reported that rather than
focusing on spending cuts and tax hikes, the plan would concentrate on
the same reforms that Brussels has long been pushing for.

“It is a kind of ‘proto-programme’, if such were needed,” the FT
quoted one senior European official as saying.

According to the same official, the negotiations are being carried
out directly with Spanish Finance Minister Luis de Guindos.

– Frankfurt bureau: +49 69 720 142; email: frankfurt@mni-news.com

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

• More cooperation in European fiscal policy justified
• Most of bank supervision to be delegated to national supervisors
• Credible banking union plan may help solve current crisis
• Rapid combinaton of national deposit protection systems not possible
• Common deposit protection could start with big banks
• Inflation expectations have remained moderate in euro zone
• Debt yields based on doubts over euro’s future “unacceptable” (what ya gonna do about it big boy!!)

• Adviser sees China Q4 GDP growth at 7.3-7.4%

The Swiss National Bank sold a chunk of EUR/AUD.

Personally I think they’re just trying to make Perfect Pete look bad.

All joking aside, it’s reserve diversification.  They’ve obviously got boatloads of euros sitting under the mattress as a result of their EUR/CHF peg support.

USD/JPY up 6 pips from when I got in, presently at 78.19.  Thrilling stuff.

Some talk of 78.00-79.25 DNT in play. Guess it must be of fairly decent size or people wouldn’t be talking about it

As yesterday, buy orders seen clustered 77.95/05, sell stops through 77.90. Got to think those sell stops there are relatively light, but then that’s just me.

TOKYO (MNI) – The following are the median forecasts for Japanese
data due in the coming week provided by economists surveyed by MNI.

August industrial output, a coincident indicator of the economy, is
forecast to post a second straight month-to-month fall due mainly to
slumping automobile output.

Economists warn that output is expected to lose traction in the
face of slower global demand and due to an expected end this month to
government subsidies for buying low-emission vehicles, which have
supported factory production as well as retail sales until a few months
ago.

According to the Ministry of Economy, Trade and Industry, output of
transportation vehicles including automobiles is projected to show a
4.4% fall in August, which would be a fourth straight month-on-month
drop after -0.2% in July and -4.0% in June.

Retail sales are expected to be flat in August after marking the
first year-on-year drop in eight months in July as subsidy-backed car
purchases continued to slow and TV sales remained depressed after
buoyant demand seen a year earlier.

On the price front, national core CPI (excluding perishables) in
August is forecast to have slipped 0.2%, a fourth year-on-year fall in a
row, but the pace of decline is seen slowing from -0.3% in July due to a
hike in electricity charges and smaller declines in gasoline prices.

Core CPI in the central Tokyo area is projected to have dipped 0.3%
y/y in September, improving from -0.5% in August and -0.6% in July.

Friday, Sept. 28, 0830 JST (2330 GMT Thursday): The Ministry of
Internal Affairs and Communications releases the consumer price index.

Forecast: -0.2% y/y in August national core CPI, a fourth straight
y/y fall after -0.3% in July and -0.2% in June; September central Tokyo
core CPI -0.3% y/y vs. -0.5% in August.

Friday, Sept. 28, 0830 JST (2330 GMT Thursday): The Ministry of
Internal Affairs and Communications releases the unemployment rate and
the Ministry of Health, Labour and Welfare releases the ratio of job
offers to job seekers, both for August.

Forecast: Unemployment 4.3%, unchanged from 4.3 July; the job
offers to seeker index 0.83 (83 job offers for every 100 people looking
for work), unchanged from July.

Friday, Sept. 28, 0830 JST (2330 GMT Thursday): The Ministry of
Internal Affairs and Communications releases August household spending.

Forecast: +1.2% y/y in real terms, which would be a seventh
straight monthly rise after +1.7% in July and +1.6% in June.

Friday, Sept. 28, 0850 JST (2350 GMT Thursday): The Ministry of
Economy, Trade and Industry releases August industrial output.

Forecast: -0.4% m/m, which would be a second straight monthly fall
after -1.0% in July and +0.4% in June and weaker than METI’s forecast
for +0.1%.

Friday, Sept. 28, 0850 JST (2350 GMT Thursday): The Ministry of
Economy, Trade and Industry releases August retail sales.

Forecast: no change y/y in August, after -0.7% in July and +0.2% in
June.

Friday, Sept. 28, 1400 JST (0500 GMT): The Ministry of Land,
Infrastructure, Transport and Tourism releases August housing starts.

Forecast: -7.1% y/y, in payback for a robust 14.0% gain in August
2011 and marking a third straight fall after -9.6% in July and -0.2% in
June; but a seasonally adjusted annualized rate will rise to 879,500
units from 870,000 in July, posting the highest level since 903,000 in
May.

skodama@marketnews.com
** MNI Tokyo Newsroom: 81-3-6860-4823 **

[TOPICS: M$J$$$,M$A$$$,MAJDS$]

EUR/USD has done a fairly sharp about turn.

We’re presently back down at 1.2965.

US investment bank notable seller in this latest swoon (not the infamous one)

Buy orders clustered 1.2950/60, light stops through 1.2950 before more buy orders 1.2920/30.

– Adds Quotes From News Conference, Background From 9th Paragraph

TOKYO (MNI) – Prime Minister Yoshihiko Noda on Friday was
re-elected as the leader of the ruling Democratic Party of Japan, as
widely expected, and is set to win a majority vote in parliament to
continue his premiership.

Noda, 55, took office on Sept. 2, 2011, becoming the third DPJ
prime minister since the party took power away from the Liberal
Democratic Party in 2009 national elections.

He is expected to reshuffle his cabinet after being re-elected as
prime minister at an extraordinary Diet session to be called soon.

In the party leadership election, Noda won 818 points from DPJ
lawmakers and other ruling party members while his three contenders
received points ranging from 113 to 154.

A former finance minister, Noda staked his political life on
raising the sales tax in order to fund growing social security costs of
the rapidly ageing population and to reduce the huge public sector debt,
at nearly 200% of GDP by far the largest among developed countries.

Last month parliament enacted by majority vote legislation that
would double the current 5% sales tax by 2015 and improve social
security services on condition that the economy continues to recover
steadily.

The focus is on when Noda will call a parliamentary election.

In exchange for support from two main opposition parties for his
tax and social security reform bills, Noda in August made a vague
promise that he would dissolve the lower house and call snap elections
“in the near future.”

Noda told a news conference on Friday that he will pick a new team
of senior DPJ policymakers before he departs for New York on Monday to
attend the United Nations General Assembly.

He said the team will be made “to prepare for upcoming elections in
both the lower house and the upper house.”

In the face of weak exports and production amid the global
slowdown, Noda said the government needs to “analyze economic conditions
well” before deciding on whether it should compile a supplementary
budget for the current fiscal year.

Economists have warned that Japan’s economy may contract in the
July-September quarter as subsidy-backed domestic demand is set to lose
steam at a time when exports are still too weak to lead a sustainable
economic recovery.

Alarmed by the European sovereign debt crisis, uncertainties about
China’s economic recovery and the dampening effects of the strong yen on
exports, the Bank of Japan on Wednesday decided to ease credit further
by raising the target of its financial asset-buying program to Y80
trillion from Y70 trillion.

Noda continues to face an uphill battle in the hung parliament as
the opposition camp, which holds a majority in the upper house, has
refused to debate a bill that will allow the government to issue Y38.3
trillion in debt for financing spending for fiscal 2012 that began on
April 1.

Finance Minister Jun Azumi has said funds totaling Y46.1 trillion
in the Y90.3 trillion national budget for the current fiscal year would
be used up by end-October without shelving expenditures.

In order to buy time until the parliament enacts the debt-financing
bill, the government is now restricting all the spending except for
outlays for the police forces and troops as well as welfare benefits and
funds for rebuilding the earthquake-hit northeastern region.

In diplomacy too, Noda faces challenges as Japan’s long-standing
territorial disputes with China and South Korea over small islands and
Japan’s wartime past erupted again this year.

Last month Tokyo protested a visit by South Korean President Lee
Myung-bak to Takeshima — or Dokdo in Korean — a group of islets
between the two countries controlled by South Korea but claimed by
Japan.

Japanese Prime Minister Yoshihiko Noda has also urged Lee to
apologize for controversial remarks about Emperor Akihito.

Lee said the emperor would not be welcome in South Korea without a
direct acknowledgment of guilt for Japan’s colonial rule of the Korean
Peninsula from 1910 to 1945. Akihito acceded to the throne in 1989.

Meanwhile, anti-Japanese protests in China became violent in some
cities this week over Tokyo’s nationalization of the Senkaku Islands
also claimed by Beijing. Mobs looted Japanese-owned retail stores and
wrecked factories.

tokyo@marketnews.com
** MNI Tokyo Newsroom: 81-3-6860-4820 **

[TOPICS: M$J$$$,M$A$$$,MGJ$$$,MT$$$$]

• SNB ready to take further measures ‘at any time’
• Downside risks to economy will stay high in near term
• Euro crisis is ‘main source of concern’ for companies
• Outlook for real sales growth ‘cautiously optimistic’
• Swiss companies remain cautious with investment plans

Oh, I nearly forgot….

• SNB WILL ENFORCE FRANC CAP WITH ‘UTMOST DETERMINATION’

Good show, you know it makes sense

–Early Corporate Chatter Of Easier Lending Conditions On Back FLS
–Sees ‘Uncertain Light’ At The End Of The Tunnel
–Hopeful Economy Will Start To Strengthen By End 2012, Into 2013

LONDON (MNI) – UK monetary policy is “already very, very loose”,
Bank of England Chief Economist Spencer Dale said today during an
interview with UK regional radio.

Dale told BBC Radio Lincolnshire that there was “a light at the end
of the tunnel” for the economy but admitted that this remained “an
uncertain light”.

Still, Dale said he was “hopeful we may see some signs of the
economy starting to strengthen at the end of this year and into next
year”.

“The backdrop is still pretty challenging,” Dale warned, when asked
about the state of the economy in general

On the construction sector, “the story there is still pretty hard
going” while in the export sector, “things are just starting to show
signs of picking up”.

Dale said manufacturers exporting to the Far East and Latin America
seemed to be doing well in light of his soundings of business conditions
during his regional visits.

“That is where the growth sectors are,” Dale added.

Asked what the BOE could do to help the situation, Dale replied
that “monetary policy is already very, very loose”.

“Interest rates are close to zero,” he added.

Dale said he had picked up chatter among firms that the banks are
beginning to discuss improving credit conditions on the back of the new
Funding for Lending scheme, launched by the BOE and UK Treasury at the
start of August.

But Dale admitted it was “early days” although there had been
“encouraging” signs for the success of the scheme.

Dale – a well-known hawk on the BOE Monetary Policy Committee, said
the central bank wanted “to see a world where we can start raising
interest rates but we need to do that as the economy strengthens …”
and so return to a world of stable growth and low inflation.

“That is our plan – but we need to do that without derailing the
economy,” he added.

–London newsroom: 4420 7862 7492; email: dthomas@marketnews.com

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

• Early signs on funding for lending scheme encouraging

We’ve got a 1.2850-1.3050 poll running from yesterday.

But Luigi wants a poll today.

So let’s have a poll within a poll

We sit at 1.3000

What’ll we see first 1.2950 or 1.3050?

Perfect Pete was making some bullish noises just before he headed out

BERLIN (MNI) – Europe is at a crossroads and the confidence crisis
needs to be contained as quickly as possibly, ECB Executive Board member
Peter Praet wrote in an opinion piece for the German Finance Ministry’s
monthly report published Friday.

“We’re witnessing currently a confidence crisis of significant
dimension which it is key to get under control as soon as possible in
order to be able to use again fully the advantages of a common
currency,” Praet said.

The central banker argued that the euro itself was not in crisis.
“There exists price stability in the Eurozone and the long-term
inflation expectations are firmly anchored on a level which is in line
with price stability,” he observed.

“The future of Europe is at crossroads currently,” Praet warned.
“In order to stabilise the situation it seems indispensable to get the
negative feedback loop between unsound public finances and the stability
of the banking system under control,” he urged.

Praet called on the member states to agree swiftly on more European
integration. “In order to restore again a frictionless functioning of
the EMU there needs to be quick and courageous steps in the direction of
more Europe,” he said.

At the same time, the principle of national responsibility must not
be undermined. “This is indeed a balancing act,” he said.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

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

She was prone to severe mood swings for little reason as well.

Yesterday it was all risk off.

Today, well so far, its been risk on.

Risk off, risk on, risk off, risk on, risk off, risk on, all on very little, gets on my bloody tits!!!

EUR/USD sits at 1.2990.

Buy orders clustered 1.2950/60, sell orders 1.3000/10 and 1.3030/50.

Pete’s shooting off in quarter of an hour, so I’ll be more than happy if we remain ensconsed in 1.2950-1.3050 range. 1.2960-1.3010 would be even betta

No euro zone economic data of note, no bond actions. Barring a tape bomb I might be in luck

Latest from the ongoing Greek- ‘Troika’ saga is that the Greek coalition could  close a deal by the end  of today with the  ECB, EU and IMF officials.

They’ve been talking until the early hours of this morning,  and sources say that Troika had actually backed down over further cuts to  pensions and salaries .

Stournaras, who has threatened to resign rather than  implement further cuts,  is due to resume talks  at 4pm local time

More… ekathimerini