March 11, 2010   

RBNZ: The Reserve Bank of New Zealand Wednesday left the official cash rate unchanged at 2.50% Thursday, in line with expectations. The accompanying statement said that the New Zealand economy was expected to enjoy a "subdued" recovery in 2010 with inflation holding above 2% but within the RBNZ's 1%-3% range, and that the New Zealand dollar was expected to remain "high."

KOREA: South Korea's central bank has kept its benchmark interest rate unchanged at 2.00% for the 13th straight month, Yonhap News reports. The decision was widely expected.

EUROPEAN PRESS

UK PRESS: Workers at Toyota's two UK plants will have their pay frozen this year because of continuing doubts about the health of the European automotive market, the Telegraph reports.

UK PRESS: The proportion of people in the UK who plan to buy a property who are first-time buyers has dropped for the second consecutive quarter to 25.8pc, according to property website Rightmove, the Telegraph reports. The group warned that the figure was well down on the 40pc of housing transactions that would usually be carried out by people buying their first home in a healthy market, the paper says.

UK PRESS: The City watchdog has sounded alarm about the prospect of a meltdown in commercial property, the Independent reports. Announcing much tougher stress tests for banks, the Financial Services Authority raised concerns that they are not setting aside enough to cover losses on the sector, the paper says.

GREECE: Despite a "successful" performance on the international stage, Greek PM Papandreou faces deepening troubles at home, the FT says.

Todays 24-hour strike called by public and private sector trade unions to protest against the government's latest austerity package will shut down Athens international airport and bring the capital to a standstill for the second time in a week, the paper says. Papandreou also faces unrest in his governing Socialist party over pay cuts for public sector workers, the party's power base for the past 10 years, the FT adds.

GREECE: The high interest rates Greece must pay to borrow money are threatening the county's ambitions to cut its deficit, raising again the specter it may need external aid, the WSJ reports.

CHINA PRESS

CHINA PRESS: China's $300 billion sovereign wealth fund is increasingly interested in seeking opportunities in Hong Kong as it shifts its focus this year to investing in emerging markets, The South China Morning Post reports citing an executive. Wang Jianxi, the vice-president of China Investment Corp (CIC), said the company's investment strategy does not target a specific region or country. But with the portfolios divided between emerging and developed markets, Hong Kong is one place the company has been seeking investment opportunities. "We have been investing in Hong Kong and will continue to seek opportunity in line with our strategy," Wang was cited saying at the sidelines of the National People's Congress.

ELSEWHERE

US PRESS: Companies are aggressively borrowing in the debt markets once

againa sign of renewed confidence in the world economy following recent

fears that struggling European countries could have difficulty financing

their budget deficits, the WSJ reports.

AUSTRALIA: The latest jobless data won't pressure the RBA to raise the

cash rate again in April, economists say in a Sydney Morning Herald

report. But the data could mean borrowers are looking at an interest

rate of 4.5% to 5% by the end of calendar 2010, as more evidence emerges

Australia has shrugged off the global financial crisis mindset. "The

labor market is still extremely healthy, we just cant expect 50,000

jobs to be created every month," ICAP economist Adam Carr says in the

report. "When you look at the lending numbers yesterday, the softer

employment numbers in February, I think the RBA will hold off in April."

CHINA

CHINA DATA:

- FEB NEW LOANS CNY700.1 BLN VS CNY1.39 TRLN JAN

- END-FEB M2 +25.52% Y/Y VS +25.98% Y/Y END-JAN

- END-FEB M1 +34.99% Y/Y VS +38.96% Y/Y END-JAN

- END-FEB M0 +21.98% Y/Y VS -0.79% Y/Y END-JAN

- END-JAN OUTSTANDING CNY LOANS +27.2%; END-DEC +31.7%

- END-FEB OUTSTANDING CNY DEPOSITS +24.97%; END-JAN +27.3%

CHINA: The NBS released the following data for February:

Feb CPI 2.7% y/y vs +1.5% y/y Jan

Feb industrial output +12.8% y/y

Jan-Feb industrial output +20.7% y/y vs +3.8% y/y Jan-Feb 09

Jan-Feb urban fixed-asset investment +26.6% y/y vs +26.5% Jan-Feb 09

Feb PPI +5.4% y/y vs +4.3% y/y Jan 

Jan-Feb CPI 2.1% y/y vs -0.3% y/y Jan-Feb 2009

Feb overall food prices +6.2% y/y vs +3.7% y/y Jan

Feb non-food price CPI +1.0% y/y vs +0.5% y/y Jan

Feb CPI +1.2% m/m vs +0.6% m/m Jan

Feb PPI +0.4% m/m

Jan-Feb PPI +4.9% y/y vs -3.9% y/y Jan-Feb 2009

Jan-Feb retail sales +17.9% y/y vs +15.2% Jan-Feb 2009

Feb retail sales +22.1% y/y

CHINA YUAN: The People's Bank of China sets the dollar-yuan central

parity rate at Cny6.8263 today, compared with Cny6.8264 set for the

previous trading day.

CHINA: Forex dealers highlighting a wire report of China tightening

rules on land sales for property development as a factor driving risk

aversion this morning. The report says land bidders in China will be

required to pay 20% deposit and land buyers need to pay 50% in one

month.

OVERNIGHT COMMENTS

JAPAN: Comments from Cabinet Office:

- GDP SHOWS RISK OF DOUBLE-DIP RECESSION LOWER NOW

- SUSTAINABLE ECO RECOVERY MAY BE EMERGING

- BUT CANNOT YET SAY ECON ON MODERATE RECOVERY TRACK

NEW ZEALAND: RBNZ governor Bollard cited by wires saying the NZ dollar's

level is not of any concern, and that it's still "a US dollar

story." Says RBNZ can afford to wait-and-see before raising rates and

they probably will not need to raise as high as in the prevous cycle,

the reports say

M&A/CORP

UK PRESS/M&A: Shares in inter-dealer broker Tullett Prebon jumped almost

26 per cent as the firm said that it was in the sights of a predator,

the Times reports. City talk suggested that the most likely bidder would

be an exchange keen to add a bond-broking operation to its equities

interests, the paper says. However, the Times notes that there had been

whispers that the putative bidder was a bank such as Macquarie or Bank

of China.

OVERNIGHT DATA RELEASES

JAPAN DATA: From the Cabinet Office:

- Q4 REAL GDP REVISED TO +0.9% Q/Q FROM PRELIM +1.1%

- Q4 ANNUALIZED REAL GDP REVISED TO +3.8% FROM +4.6%

- Q4 CAPEX REVISED TO +0.9% FROM PRELIM +1.0% Q/Q

- Q4 REVISED DOMESTIC DEMAND CONTRIBUTION +0.4 PT VS +0.6

- Q4 PRIVATE CONSUMPTION REVISED TO +0.7% FROM +0.7%

- Q4 REVISED NET EXPORT CONTRIBUTION +0.5 PT VS +0.5 PT

- Q4 PRIVATE INVENTORY CONTRIBUTION -0.1 PT VS +0.1 PT

JAPAN: Capital flows for the week ended March 6, according to data

from the Ministry of Finance:

Japanese investors:

     -- Bought net Y119.5 bln in foreign equities

     -- Bought net Y677.3 bln in foreign bonds

     -- Sold net Y30.8 bln in foreign money market instruments

     -- Resulting in a net purchase of Y765.9 bln.

Foreign investors:

     -- Bought net Y261.5 bln in Japanese equities

     -- Bought net Y461.9 bln in Japanese bonds

     -- Sold net Y210.4 bln in Japanese money market instruments

     -- Resulting in a net purchase of Y513.0 bln.

AUSTRALIA: From the ABS:

- Feb unemployment rate 5.3% vs revised 5.2% in Jan

- Market forecast was for 5.3% in Feb

- Feb employment up 400 at 10.971 mln

US DATA: RealtyTrac's February 2010  Foreclosure Market Report shows

foreclosure filings were reported on 308,524 U.S. properties during the

month, a decrease of 2 percent from the previous month but still 6

percent above the level reported in February 2009. The report also shows

one in every 418 U.S. housing units received a foreclosure filing in

February.

OTHER NEWS

S&P/US: Standard & Poor's Thursday gave a vote of confidence in the U.S.

dollar, saying it believes the dollar will continue to be the key

international currency, a position that it will retain "so long as

inflation is moderate and stable, financial markets are sound and

relatively unfettered, and U.S. government spending is efficient and

sustainable." Full story on MNI mainwire

FX MARKET

FOREX: The dollar was mixed in Asia Thursday, losing ground against the

yen but firmer on the euro. Dollar-yen opened near Y90.56, but by the

time China's data were published, had sank to around Y90.30. The pair

then dipped further to Y90.20 in late morning trade, before settling

arousn Y90.35. Euro-dollar was trading at $1.3637 just before midday

here, at the lower end of a fairly narrow $1.3629 to $1.3660 Asian

range. Sterling remained pressured below $1.50, but off the lows seen at

$1.4950.

OTHER MARKETS

EUROPEAN STOCKS: Major European bourses are initially seen lower

Thursday. Spreadbetters Cantor Index are calling the FTSE down 16, the

DAX down 24, the CAC down 20 and the Eurostoxx 50 down 15.

US STOCKS: Globex traded US index futures are trading modestly lower in

Asia Thursday. The front-month S&P Mar contract was last trading lower

by 4.4 points at 1141.3, with the Nasdaq Mar contract down 5.5 points at

1913.25. Dow futures are also in the red, down 32 points at 10533.

US STOCKS CLOSE: Dow and Nasdaq scored modest gains on the day, though

Dow had been higher earlier in the session before an afternoon

downdraft. Blue chips added almost 3 points to end the day at 10,567

after seeing a session high at 10,602, while Nasdaq added 18 points or

0.78% to end at 2359 after notching a new 2010 high at 2361.66.

TSYS: Treasuries are little chnaged in Asian trade Thursday, tied to

tight ranges ahead of tonight's Bond auction. The yield on the 2Y was

last at 0.90%, with the 5Y at 2.38%, the 10Y at 3.72% and the Bond at

4.69%.

AUSSIE BONDS: Aussie govvies are tradeing lower Thursday. The yield on

the 2Y was last at 4.865%, higher by 9 bps, with the yield on the 10Y

higher by 11.5 bps at 5.655%. This left the 2/10-yr spread 2.5 bps

steeper on the day at 79 bps.

JGB AUCTION: A price competitive auction for Y2.4 trillion of the 0.5%

coupon 5-year #88 Japanese Government Bonds by the Ministry of Finance

produced a lowest accepted price of 100.06 to yield 0.487%, the MOF said

Thursday. The bid/cover ratio was 3.08 (3.64) times.

Lowest price:                      100.06

Yield at lowest price:             0.487%

Weighted average price:            100.07

Yield at average price:            0.485%

Total bids received:               Y6.7801 tln

Bids accepted:                     Y2.2009 tln

Bids accepted at lowest price:     56.5103%

Bid-to-cover ratio:                3.08 (3.64)

Tail                               0.01 (0.01)

JGBS: Japanese government bond prices were nearly flat this morning,

after seesawing in a tight range amid sluggish trading before the

release of 5-year JGB auction results.

--Benchmark 10-year yield was flat at 1.300%

--2-year bonds untraded

--5-year yield was 0.5 bps lower at 0.465%

--20-year yield was flat at 2.125%

--30-year bonds untraded

JAPAN STOCKS: As noted, Japan's benchmark stock indices ended the

morning session higher, aiming to snap a two-day losing streak. The

Nikkei 225 was higher by 94.24 points, or 0.89%, to stand at 10658.16.

The broader-based TOPIX was 7.69 points, or 0.83%, higher at 930.1..

Volume in the Nikkei constituents totalled 588.4 mln shares, with 181

issues trading higher, 33 lower and 11 unchanged.

CHINA STOCKS: Shanghai Composite Index ends morning down 0.64% at

3,029.39

HONG KONG STOCKS: Hang Seng Index ends morning down 0.35% at 21,134.22

OIL: Crude futures are trading lower in Asian trade Thursday. The

front-month Nymex WTI contract was last 52 cents lower at $81.57, having

traded an $81.51 to $82.09 range.

COMING UP TODAY( times GMT/ET)

0700/0200   Germany 4Q labor costs       

0745/0245   France Jan central govt deficit

0745/0245   France 4Q final payrolls

0800/0300   ECB Governing Council member Yves Mersch presents

            Luxembourg central bank bulletin, in Luxembourg

0900/0400   ECB to publish Monthly Bulletin

0930/0430   German Export and Wholesale Association (BGA)

            releases new export forecasts, in Berlin

0930/0430   UK Feb BoE/GfK NOP Inflation Attitudes Survey

    -       UK Stg900 mln 1.25% Nov 2032 IL Gilt Tap

1200/0700   Brazil Jan-10 IBGE retail sales ex-auto SA

1200/0700   Brazil 4Q-09  GDP q/q SA (base 2000)

1230/0830   Canada 4Q-09  Capacity utilization

1230/0830   Canada Jan-10 Intl merchandise trade

1300/0800   SNB announces interest rate decision

1330/0830   German Chancellor Angela Merkel and Dutch PM Jan

            Peter Balkenende joint press conference, in The Hague

1330/0830   US Jan-10 Intl Trade Balance

1330/0830   US 06-Mar Jobless Claims

1500/1000   US 4Q-09  Services

1530/1030   US 05-Mar EIA Natural Gas Stocks

1800/1300   US Treasury auctions $13 bln 29Y-11mo (reopening)

1900/1400   NY Fed's Dudley speaks, in London

2130/1630   US 01-Mar Money Supply (M2)