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Thursday, September 6

6th Sep - EU Open: ECB Ahoy!

The dreaded ECB day is here - whatever comes out of it, the expectations seem to be very low based on the headlines. The market reaction remains a question mark - key will be the possible road map and the strength and viability of the promises to be given.

News roundup – Between The Hedges
The 6am Cut London – alphaville / FT
Emerging Markets Headlines – beyondbrics / FT

TV: Bloomberg, BBC
Debt crisis: live – The Telegraph
The Euro Crisis Blog – WSJ
Tracking Europe’s Debt Crisis – NYT
FX Options Analytics – Saxo Bank
European 10yr Yields and Spreads – MTS indices

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Asia today: Oz jobs market softens in Aug but AUD finds supportSaxo Bank
Asia was again focused on Australia today and it was the turn of the August employment report to affect the AUD. On the headline, the employment change looked weak, with 8.8k jobs lost in the month, but all jobs lost were in the part-time category

Morning Briefing (Asia): ECB Bond Buying Program Captures Markets AttentionBNY Mellon
Japan’s story of woe has not ended with the passage of the sales tax hike through the Diet

Market Preview: ECB's monetary policy eyed Saxo Bank
European markets are expected to open higher Thursday amid hopes that the ECB will undertake measures to counter the region's debt crisis at its monetary policy meeting later today. The Bank of England's monetary policy stance is also on tap today.

Danske DailyDanske Bank (pdf)
Details of the ECB bond buying plan were leaked to the press yesterday and received an overall positive market reaction. The euro strengthened and peripheral bond yield spreads tightened further. Today is  ‘great central bank day’ with no  fewer  than three central bank meetings on the agenda and the ECB meeting topping the list

Morning Briefing (EU/US): Spanish eyesBNY Mellon

Whilst all eyes are on today’s ECB meeting, it may be Spain’s take on proceedings that matters most

AamukatsausNordea (pdf)
Kaikki katseet tänään EKP:ssa – lisätietoja osto-ohjelmasta odotetaan innolla * Suomen talouskasvu arvioitua heikompaa * EURUSD nousuun EKP:n rajoittamattomista velkakirjaostoista uutisoinnin myötä 

AamukatsausTapiola (pdf)

Markkina varovaisena ennen tämän päivän EKP:n korkokokousta, josta odotetaan tarkempia tietoja valtionlainojen osto-ohjelmasta. Eilisen huhun mukaan EKP voisi aloittaa rajoittamattoman osto-ohjelman, jossa tukiostot sterilisoitaisiin. Osakefutuurit marginaalisesti plussan puolella. Nokia esitteli odotetun kaltaiset puhelimet, mutta pettymyksiäkin ilmeni ja osake romahti.


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The limits of a purely intra-euro rebalancing strategybruegel

Euro Area: Restore confidence to end recessionNordea
Key forward-looking indicators have stabilised at recessionary low levels. ECB’s interventions will be decisive because it is done smarter this time. It will help reduce financial stress and gradually restore confidence. It will not solve the debt crisis and the event risks for this autumn are numerous. Recovery seen from Q4. (full pdf)

In euro crisis, U.S. lessons unlearnedWP

Two Tears for Two-TiersBruce Krasting

Goldman Sachs, ECB preview: Spelling out the detailZH
GS: We therefore foresee a “compromise” in the form of a statement that the ECB will intervene, unlimited if needed, in markets in order to keep yields in a range that is deemed as consistent with fundamentals

Devil in the details Nordea
basically you cannot squeeze peripheral yields without raising the yields in the core markets. So THAT is how the ECB will achieve the “recoupling” of peripheral spreads with the “core”?!

ECB Preview: Draghi plan leaked Danske Bank (pdf)

*More questions pre-Draghi alphaville / FT

The ECB’s possible Portugese gambit alphaville / FT
JPM’s Malcom Barr is of the opinion that the ECB might just kick off its move by purchasing short-dated Portuguese sovereign debt.

Draghi, Spanish banks, and revisiting the collateral issuealphaville / FT
Nomura: Spain is in a category of its own. While there are some outflows in countries like Portugal and Italy, the size of these outflows is not nearly as large as in Spain. On a 3-month rolling basis, Italy’s outflows represent about 15% of GDP currently, while they represent about 50% of GDP for Spain.

Financial fragmentation across the Eurozone can not be ended by extending ECB credit to periphery governmentsSober Look

Why The Market Expects The ECB To Soak Up All Remaining 2012 IssuanceZH
It appears the S&P 500 is pricing in an increase of around USD300bn in the short-term. This USD 300bn amounts to EUR 240bn - a very special and rather too coincidental number. Based on expectations of supply, the EMU16 nations have EUR 245bn issuance remaining for the rest of 2012.

Spain's Social Security Fund Runs Out of Money; Full Sovereign Bailout Hits €300 Billion; Breathtaking Implosion in Every Way; Five Things Spain Needs to DoMish’s

88% Of Traders Expect A Spanish 'Bailout' By Year-EndZH

Spain, Bad Banks, Assets, Losses and LiesGolem XIV
Spain’s BALLS – Part two – Asset, losses and Lies.Golem XIV
Spain’s BALLS. Part Three. A right load of…Golem XIV

The Post Globalized World Part 1: Why The PIGS Are Out Of LuckZH
Deutsche Bank’s short piece.

Happy birthday Swiss franc floor: we salute youalphaville / FT

Investment Outlook Sep 2012: The Lending LindyPIMCO
Our entire finance-based monetary system – led by banks but typified by insurance companies, investment management firms and hedge funds as well – is based on an acceptable level of carry and the expectation of earning it. In a New Normal economy where lenders dance to the Blue Danube instead of the Lindy, how should we move our own feet?  Carefully, I suppose, and with recognition that historic returns are just that – historic.​

Australia: End of the great mining boom in sight – but timing uncertainNordea
Eventually a hard landing and a sharp AUD depreciation is a real risk for the Australian economy (full pdf)

Asia FX Outlook: Beggar-thy-neighbour policiesNordea
Asian currencies (including AUD and NZD) outperformed vs. the USD during the summer, thanks to hopes for accommodative policies to boost growth, rising oil prices, yield-chasing effects and impressive equity market developments. (full pdf)

US: Moving slowly forwardNordea
Although the US economy lost momentum in Q2, much improved fundamentals suggest that the recovery will continue the next few years, but at a moderate pace. However, US fiscal challenges around the end of this year imply significant risks to the outlook. (full pdf)

China: Stability, stability and … stabilityNordea
Monetary and fiscal stimuli during the spring will prevent China’s economy to deteriorate further. However no quick rebound is expected and growth will remain sluggish for some time. The authorities’ hesitation to further action is good news, since they have given up blindly pursuing economic expansion at any cost. If growth stability is threatened, more measures will come. (full pdf)

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