Things you missed today

  • S&P downgrades EU rating to AA  from AA+

  • China to tolerates a weaker  yuan

  • Lloyds of London Executives bought close to 850k shares as a sign of confidence in stock.

  • Mexican central bank raised rates by 50 bps .expectations were for 25 bps. hike. the Central bank trying to limit downside of USD/MXN

  • Talk that China’s OIL spr is almost full,elimination  of another persistent bullish metric

  • Silver near a 22 month High

  • USDA planted acreage number were Bearish corn and Slightly bullish Soy.A suprise vs.Consensus

ECB

US GOVTS: Peripheral EGBs on fire as ECB signals move away from capital key rules – IFR News

30-Jun-2016 11:34:24 AM

BOSTON, June 30 (IFR) – Today’s news so far is much more about what is occurring in Europe than stateside. A bit over an hour ago, BoE Governor Carney signaled that the BoE was likely to ease policy in various forms this summer. This unleashed a bull-steepening rally in the gilt complex.

News out of the ECB has it that because they are running out of eligible bonds to purchase in their QE operations, they are considering loosening up the capital key rules that essentially proportion ECB bond purchases to the amount of capital that each country has on deposit at the ECB. Loosening such rules will allow the ECB to buy more bonds from the peripheral markets. European peripheral yields are thus plummeting, with Italian and Spanish bonds leading the way lower by 19 and 18 bps, respectively, in the 10-year tenor.

 

brief chaos

ECB announced that they will expand Pool of QE as brexit is exhausting Supplies of Assets.What that actually means is still unknown.Do they buy more corp debt? more bank Debt?Allow Bonds with greater negative yield then Deposit rate eligible for purchase? What we do know is that Central banks  are providing more stimulus.

Yen is moving lower and I believe traders are scared that BOJ will announce new stimulus soon .If 2 central banks have announced plans today doesn’t it look like a coordinated effort to do so?

Bunds move lower for 2 reasons  1)  Spread trades vs. peripheral  2) yields will become too negative and  they will be ineligible  for purchases under QE program.All speculation for now.

Spoos,FTSE  DAX all   love it. Dax up into the gap from last week  and this triggers some stops giving extra umphh to prices

BOE Carney

BOE CARNEY: FACES TRADE-OFF STABILISING GROWTH, JOBS, OUTPUT
BOE CARNEY: MONETARY POLICY CAN’T FULLY OFFSET NEGATIVE SHOCK
 BOE CARNEY: UNCERTAINTY DRAG MAY BE GREATER THAN FORECAST
BOE CARNEY: PLAUSIBLE UNCERTAINTY ELEVATED FOR SOME TIME
CARNEY: BOE POLICY TO JOIN UP MACRO-PRU, REGULATION, MONPOL
BOE CARNEY: IF BANK RATE TOO LOW CAN HIT CREDIT AVAILABILITY
BOE CARNEY: MATERIAL SLOWING DUE BREXIT NOW CENTRAL FORECAST
CARNEY: BOE TO OFFER WEEKLY INDEXED LONG-TERM REPOS TO END SEP
CARNEY: BOE MPC INITIAL ASSESSMENT JULY, NEW FORECASTS AUG IR
BOE CARNEY: MPC WILL DISCUSS FURTHER POLICY INSTRUMENTS IN AUG
10:00 06/30 CDT BOE CARNEY: SOME MONETARY POLICY EASING LIKELY OVER SUMMER

Bearish pound comments,Bullish Risk as more Stimulus

OPEC and brexit comments

 The Bank OF England Annual Report is out and In it, the Bank admits that it doesn’t know the impact of the Brexit vote on its balance sheet, saying:

“The United Kingdom held a referendum on 23 June on whether or not to remain a member of the European Union. As a result of the decision to leave the EU, the Bank continues to consider the implications of this decision on its strategy, business plan and balance sheet. A reasonable estimate of the impact on the balance sheet cannot be made at this time due to volatility preventing use of appropriate market pricing.”

Microcosm of the market as of late. Don’t know full impact of brexit at this time.Also a comment from Soc Gen ‘Investors everywhere are a bit unsure what the UK’s departure from the EU will look like and what it means, a mindset that may now last a while.”

OPEC comments today :

  1.  Saudi Aramaco Cuts official selling prices(OSP) to USA by .10  =bearish
  2. Saudi Aramco cuts OSP to asia by .40 cents =Bearish
  3. Saudi Aramco raised OSP to NW Europe  +30 Cents  =Bullish
  4. Reuters survey shows  June OPEC production higher by 250k a day  highest in  recent history =bearish

 

DTN mornings

ire: DTN (DTN) Date: Jun 30 2016 8:11:03
DTN Before The Bell Grains 06/30 08:08

DTN Before The Bell Grains 06/30 08:08

Grains A Little Higher, USDA Report Ahead

September corn was up 1/4 cent, August soybeans were up 3 1/4 cents, and
September Chicago wheat was up 2 3/4 cents.

By Todd Hultman
DTN Analyst

Morning CME Globex Update:

September corn was up 1/4 cent, August soybeans were up 3 1/4 cents, and
September Chicago wheat was up 2 3/4 cents. At 8 a.m., USDA announced that 3.2
million bushels (80,265 mt) of U.S. corn was sold to Mexico for 2016-17 and 1.6
million bushels (40,135 mt) was sold for 2017-18. Before the announcement, all
three grains were a little higher with USDA’s Acreage and Grain Stocks
estimates due out at 11 a.m. CDT.

Other Markets:
Dow Jones: Higher
U.S. Dollar Index: Lower
Gold: Lower
Crude Oil: Lower

Corn:

At 8 a.m., USDA announced that 3.2 million bushels (80,265 mt) of U.S. corn
was sold to Mexico for 2016-17 and 1.6 million bushels (40,135 mt) was sold for
2017-18. Before the announcement, September corn was slightly higher with
USDA’s Acreage and Grains Stocks estimates due out at 11 a.m. CDT. Most are
expecting to see a planting estimate below USDA’s previous 93.6 million acre
guess, but there is a bearish risk as last year’s 5 million prevented acres
have not yet been accounted for in 2016’s estimates. Dow Jones’ survey expects
to see 4.53 billion bushels of June 1 corn stocks. USDA said early Thursday
that last week’s export sales and shipments of corn totaled 18.4 and 58.9
million bushels respectively, a bullish combination that still has total
shipments in 2015-16 down 6% from a year ago. September corn prices were hit
last week by rain across the Midwest and the Brexit vote. This week’s selling
was prompted by an increase of rain chances in the extended forecast and they
are still there. Thursday’s USDA reports are likely to have an important say in
where prices go from here, but weather will have the final word and so far,
crop conditions are generally favorable. DTN’s National Corn Index closed at
$3.39 Wednesday, priced 39 cents below the September contract and back in its
old sideways range. There were 176 deliveries of July corn early Thursday. In
outside markets, the U.S. dollar index is down .05 and August crude oil is down
$1.02 a barrel.

Soybeans:

August soybeans were a few cents higher in quiet trading ahead of USDA’s 11
a.m. CDT reports. Pre-report estimates are expecting 84 million acres of
soybean plantings and 833 million bushels of soybeans on hand June 1. The
planting estimate has the most uncertainty of all of Thursday’s numbers and
could have a big price response, depending on the level of surprise. Early
Thursday, USDA said that last week’s export sales and shipments of soybeans
totaled 26.8 and 12.4 million bushels respectively with unknown leading the
higher pace of sales. Total sales and shipments in 2015-16 are even with a year
ago, but actual shipments are down 8% and that is still a concern. The size of
this year’s soybean crop will continue to be debated, but so far, demand for
soybeans and meal is keeping August soybeans in an uptrend. DTN’s National
Soybean Index closed at $10.79 Wednesday, priced 33 cents below the November
contract, not far from the June high of $11.08. There were 595 contracts of
July soybeans and 1,853 contracts of July bean oil delivered early Thursday,
but no deliveries for soybean meal.

Wheat:

September Chicago wheat was a little higher early with a narrow overnight
range ahead of Thursday’s USDA reports. USDA said that last week’s export sales
and shipments of wheat totaled 23.7 and 19.5 million bushels respectively, a
bullish combination that has the total for 2015-16 up 31% from last year’s
anemic pace. Kansas may have some rain interrupting harvest on Thursday, but
heavier amounts are expected in the next five days. DTN Staff Reported Emily
Unglesbee wrote early Thursday that winter wheat yields in Kansas are up, but
protein levels are down (see “Yields Soar, Protein Levels Dip”). The
fundamental outlook for wheat continues to be bearish and that is likely to be
reinforced in Thursday’s numbers from USDA. September Chicago wheat closed at a
new contract low on Wednesday and remains under bearish pressure at a very
cheap price. DTN’s National SRW index closed at $4.09 Wednesday, priced 36
cents below the September contract and back in the lower end of its expanded
six-month range. Early Thursday, there were 391 deliveries of July Chicago
wheat and 919 deliveries of July K.C. wheat, but none for Minneapolis.

Todd Hultman can be reached at todd.hultman@dtn.com