While the US takes the day off after another near-record low volume surge to a new all time high in the S&P500, a level which is now just 125 points away from Goldman’s year end target for 2016, the rest of the world will be patiently awaiting to see if oil’s next move, as a result of today’s OPEC meeting will be to $60 or to $100. For now at least the answer is the former (see more here from the WSJ), with Brent recently touching a fresh 4 year low in the mid-$75s, as WTI doesn’t fare much better and was down 2% at last check to $72.20 after touching a low of $71.89. It appears the prepared remarks by the OPEC president to the 166th conference have not eased fears that despite all the rhetoric OPEC will be unable to get all sides on the same story, even though the speech notes “ample supply, moderate demand and warns that “if falling price trend continues, “long-term sustainability of capacity expansion plans and investment projects may be put at risk.”
But while crude is crashing, Eurozone bonds continue to reach for fresh record high, with all peripheral bond yields down to new all time lows and the Germany 10 Year sliding as low as 0.711%, in its quest to catch up with the 10 Year JGB which at last check was trading just a fraction over 0.40%.
One outlier is Greece: what has been increasingly questioned by credit investors of late is the disbursement of Greece’s bailout programme. Following a marathon 24hour discussion in Paris, Greece and its EU/IMF lenders apparently failed to reconcile their differences over next year’s fiscal gap which is holding up the final review of the programme. Per the WSJ, international creditors are looking at extending Greece’s bailout program by up to 6 months but to get the extension the Greek government would have to formally request it by the end of next week. The discussions will move from Paris to Brussels ahead of the Eurogroup meeting on December 8th. There is also an emergency meeting this morning between Samaras and Vice President/Foreign Minister Venizelos. Greek as well as Spanish and Italian bonds were the clear underperformer yesterday amid the further strength in core government bond markets. As a result, this morning the 10yr Greek bond yield has jumped substantially and stood just shy of 8.50% at last check.
And with central banks now firmly in control of all assets, as bonds rise so do stocks, and European equities trade in the green across the board after steadily ebbing higher throughout the session with the DAX ascending towards the 10,000 handle; a level which hasn’t been reached since the 7th July.
As RanSquawk summarizes, macro newsflow has remained relatively light throughout the session, although this morning’s Eurozone data releases have continued to highlight a dreary picture of the area’s inflation prospects with both Spanish and German state CPI’s highlighting the deflationary pressures in Europe. More specifically, the prospect of falling inflation in the Euro-zone will likely re-ignite the premise of potential QE from the ECB in order to stimulate prices and safe guard the Euro-zone. As such bund futures have continued to edge higher touching fresh contract highs at 152.75, albeit in relatively light volume owning to the Thanksgiving holiday.
To summarize:
European shares rise with the real estate and chemicals sectors outperforming and oil & gas, retail underperforming. The German and Italian markets are the best- performing larger bourses. German jobless rate reaches record low, Brent crude drops to 4-year low, Spanish consumer prices drop more than forecast. China’s central bank refrained from selling repo agreements for first time since July, loosening monetary policy further. U.S. Thanksgiving holiday today.
Euronext says indexes not calculating due to technical problem.
