Despite dip-buying from regional investors JGB's were trading at 143.82 (-25 ticks) at 0608BST. Large domestic names said to be the biggest sellers and prices were also weighed by strength in the Nikkei (+0.8%). (RANsquawk/IFR)
Spain will not seek a bailout if there are new conditions, according to EU sources. Separately, it was reported that Spanish banks will likely receive a first tranche of EU aid of EUR 30bln in the next few days, according to sources at the Spanish Finance Ministry. (El Pais/France24)
Italian lawmakers gave final approval Tuesday to EUR 26bln in spending cutbacks over three years that will see a 10% cut in the ranks of public sector workers. (AFP)
Italian lawmakers voted by 371 to 86 with 22 absentions to approve the cutbacks, which the government of PM Monti set out on July 5. The approval had been widely expected.
Italian PM Monti is coming under increasing pressure from Italian economists and politicians who are proposing to use the country's vast but often dormant resources to slash its debt mountain rather than become hostage to the perceived diktat of Germany and Brussels. (FT - More)
S&P lowered its outlook on Greece to negative from stable, affirming the ratings at 'CCC' noting it will be difficult for the government to make further cuts to meet the conditions required to secure the next aid tranche from the Troika. (Newswires) The rating agency still sees Greek net government debt to GDP exceeding 170% of GDP at the end of 2013.
EUR/USD drifted lower from the Asian open with model and macro funds said to be buying USD's across the board. Overall volumes have been thin with little in the way of fresh news and decent sized strikes 20 pips either side of 1.2400 are seen anchoring the pair. Elsewhere, USD/JPY seen marginally lower but largely un-reactive to the latest reports the the Japan's Liberal Democratic Party is likely to submit a censure motion against the existing administration unless the premier promises to dissolve the lower house for a general election. (RANsquawk/IFR/Nikkei)
US API Crude Oil Inventories (Aug 3) W/W -5354K vs. Prev. -11605K. (Newswires)
- US API Gasoline Inventories (Aug 3) W/W 417K vs. Prev. -1338K
- US API Distillate Inventory (Aug 3) W/W 2370K vs. Prev. -1366K
- US API Cushing Crude OK Inventory (Aug 3) W/W -791K vs. Prev. -1396K
WTI crude futures are seen trading lower by USD 0.45 at USD 93.22 heading into the European open as API data shows gasoline usage in the US was the lowest since February. Last price taken at USD 93.23. (RANsquawk)
T-notes trended lower throughout the session on Tuesday as market participants remained hopeful that the ECB will soon begin to buy bonds which in turn lead to more peripheral bond yield spreads narrowing. The selling was evident across the curve, with particular pressure on the long-end, as both CTA accounts and HF accounts reduced allocation to the sector ahead of the 30y auction later on in the week. The 3y note auction failed to support the price action and at the pit close, T-notes settled down 17+ ticks at 133.18. Finally the DJIA finished up 0.38% at 13166.86, the S&P 500 finished up 0.50% at 1401.21 and the Nasdaq 100 finished up 0.86% at 2717.16.UST's were trading up 3 ticks at 133.21+ at 0636BST having risen in the early part of the session, but any gains have seemingly been capped ahead of the USD 24bln in 10yr supply hitting the market later today from the US at 1800BST. (RANsquawk)
USD 32bln 3y note auction drew yield 0.370% vs. Exp. 0.361% (WI stopped at 0.365%) and b/c 3.51 vs. Avg. 3.50 (Prev. 3.52). Indirects took 29.7% vs. Avg. 33.46% (Prev. 30.09%) and allotted at high was 22.25%. (Newswires)
This represents a tail in the WI of 0.5bps and slightly below par buy-side demand from domestic and foreign accounts.
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