Despite earlier comments from Obama on Tuesday night, who called for a pause in authorizing military strikes on Syria, which led to another drop in crude prices overnight, the drop has since reversed and both WTI and Brent Crude contracts are trading in the green. Whether this is the result of a note by Goldman analysts who noted that the Brent crude sell-off was overdone and that they see no improvement regarding the conflict in Libya which is constraining oil production, or because Russia is once again throwing hurdles in the international process to force Syrian disarmament, is unknown.
The lack of any key catalysts and no USDJPY levitation, led to most global markets unchanged, and futures currently trading sideways.Stocks traded higher in Europe this morning, with the Italian benchmark stock index outperforming after the Italian Senate Committee adjourned the debate on Berlusconi to September 12th. In spite of higher stocks, as well as supply from Germany today and Italy on Thursday, Bunds remained better bid on the back of reinvestment flow from Germany where EUR 17.26bln coupon & redemption is to be repaid this week. Looking elsewhere, even though last night Apple failed to spark enthusiasm after the company unveiled two new iPhones, the 5S and new not so cheap model the 5C, ARM Holdings shares in London surged by almost 5% after it was reported that co.’s 64-bit technology is featured in the new 5S model.
What is not trading sideways is Apple which is down over 2% to just over $480 as all hopes of a China Mobile deal fall apart, coupled with pervasive critical panning of the new iPhones which, aside for the commodity version, is just the old iPhone with an extension that allows the NSA's new fingerprint database to be filled in record time.
While there are no major macroeconomic releases scheduled for the US trading half of the session, there are two major bond issues hitting the market, with a $21 billion 10Y note auction at 1 pm, and the Verizon 8 part deal which may be as high as $49 billion also expected to price later today.
Overnight news bulletin from Bloomberg and Ran
- US President Obama called for a pause in authorizing military strikes on Syria.
- Treasuries gain before Verizon prices its 8-part deal, which could be as much as $49b. Week’s auctions continue with $21b 10Y notes; stopout yield at WI level of 2.945% would be highest since June 2011.
- Treasuries may be lifted by rate lock unwinds related to Verizon deal, according to InTouch Capital Markets; VZ launch expected this morning in New York
- After telling the nation 10 days ago he would ask Congress to authorize a strike against Syria, Obama reversed course last night in a nationally televised address and said he would pursue a proposal to have Syria surrender its stockpiles of chemical arms, thus casting his lot with Russia’s Vladimir Putin
- U.K. unemployment fell to 7.7% in the quarter through July from 7.8% in 2Q, moving closer to the 7% threshold at which Bank of England’s Carney has said officials will reassess their policy stance; UK Claimant Count Rate (Aug) M/M 4.2% vs. Exp. 4.3% (Prev. 4.3%) - Lowest since Feb-2009.
- Chinese Premier Li Keqiang said the foundations of a growth rebound aren’t solid while cautioning that stimulus won’t help resolve deep-rooted issues in the world’s second-largest economy
- ECB’s Luc Coene said “it’s clear” that Greece will need additional aid, “one time for certain, possibly two times”