A QE Fixation

European credit markets widened Thursday, reversing some of the outperformance seen this week. Profit taking no doubt contributed to the widening given the spread compression over the previous two days. Investors are still fixated on quantitative easing, and gold reached another record high of $1364 an oune.

“The jobless claims data failed to boost the US markets, possibly due to QE hopes being dampened slightly.”

Gavan Nolan


News that the Vietnamese central bank is considering lifting its ban on gold imports probably helped the price rise. The economic data has been mixed this week, with a better than expected ISM report offset by a disappointing ADP employment survey. Either way, the markets appear to be convinced that QE is inevitable in the months ahead, vice president Gavan Nolan at Markit Credit Reseach writes in his daily alert.

Today’s better than expected weekly initial jobless claims may have given them pause for thought, and gold retreated sharply in the afternoon.

The claims figures aren’t relevant to Friday’s September non-farm payrolls but still acted as a positive catalyst for European markets, Nolan points out.

“The two central bank rate setting meetings were something of an irrelevance, as expected by most,” he continues.

The Bank of England kept rates on hold and maintained the level of QE at £200 billion.

“It will be interesting to see from the minutes later this month whether MPC member Adam Posen voted in favour of additional QE,” Nolan adds.

The ECB also kept rates on hold and Trichet’s press conference offered the usual platitudes.

Sovereign spreads were little changed Thursday, arresting their underperformance this week.

Ireland continued to attract interest after the National Treasury Management Agency issued a statement confirming that only unlisted institutions that are 100% under state control, i.e. Anglo Irish and Irish Nationwide, will see subordinated bondholders forced to share the burden of bailout.

The government also reiterated that it has “no intention” of imposing losses on senior bondholders.

AIB, which is under government control but it is to retain its listing, won’t be subject to subordinated burden sharing. Irish bank CDS spreads, never the most liquid, saw little movement on the news.”

The jobless claims data failed to boost the US markets, possibly due to QE hopes being dampened slightly.

US same-store sales gave another positive signal on the economy. Luxury retailer Nordstrom posted a 7.5% increase in sales for September, while Limited Brands also beat expectations with a 12% rise.

  • Markit iTraxxEurope 103bp (+1.5), Markit iTraxx Crossover 475bp (0)
  • Markit iTraxx SovX Western Europe 151.5bp (-1)
  • Markit iTraxx Senior Financials 129bp (+2)
  • Sovereigns – Greece 745bp (0), Spain 228bp (0), Portugal 410bp (+5), Italy 193bp (0), Ireland 440bp (-3), Belgium 129bp (+2)
  • BP 146bp (+8)

Equity Trading Highlights

Markit BOAT is a trade reporting platform which consolidates pan-European cash equity trade data from MTFs, Dark Pools and OTC transactions. The trading activity in this report took place on 7th October 2010 and was published by Markit BOAT on the same day. Trading activity reported with the “Market Condition” flag is excluded from this report. Such trading activity is not relevant because the trade price and/or trading process does not reference or correlate with the then current market price.

Unique Market Activity

The “Unique Market Activity” section lists stocks which were not active on Markit BOAT on the previous trading day.

Name Sector Volume Turnover €
BANK ZACHODNI Financials 159,918 8,706,201
THE VITEC GROUP Industrials 150,303 861,186
ING BANK SLASKI Financials 3,403 734,340
DRAEGERWERK Industrials 11,624 591,496
ERG Oil & Gas 51,559 498,542
SVM UK ACTIVE FUND Financials 250,000 488,616
SONAECOM SGPS Telecoms 309,841 449,129
POLSKA GRUPA ENERGETYCZNA Utilities 74,429 405,159
INDUSTRIVÄRDEN AB Financials 35,618 378,011
TESSENDERLO Basic Materials 16,268 370,565

Top 10 ETF

Name Volume Turnover €
DJ STOXX 600 OPTIMISED AUTOMOBILES & PARTS SOURCE ETF 229,512 39,078,059
DB X-TRACKERS – MSCI ASIA AC ASIA EX JAPAN TRN INDEX ETF 1,150,000 26,769,239
UBS – ETF MSCI EUROPE I 534 24,459,870
DJ STOXX 600 OPTIMISED BANKS SOURCE ETF 269,449 19,394,350
ETFS WTI OIL 2MTH OIL SECURITIES 500,000 18,278,597
DJ STOXX 600 OPTIMISED OIL & GAS SOURCE ETF 138,000 18,272,299
DJ STOXX 600 OPTIMISED BASIC RESOURCES SOURCE ETF 49,986 16,275,517
DB X TRACKERS – DAX ETF 236,310 14,804,627
ISHARES IBOXX LSC1.5-10.5 DE 120,000 13,195,800
MSCI RUSSIA 25% CAPPED INDEX ETF 528,868 11,548,354

Top 10 Trades

Name Sector Volume Turnover €
VOLVO Industrials 302,915,936 3,036,853,408
EDENRED Consumer Goods 15,461,844 227,289,104
BANCO SANTANDER Financials 14,400,000 138,241,722
SIEMENS Industrials 1,339,538 104,082,099
SNAM RETE GAS Oil & Gas 13,000,000 48,457,500
RIO TINTO Basic Materials 1,000,000 44,377,990
BEKAERT Industrials 200,000 39,649,500
RESOLUTION Financials 12,895,685 36,705,911
DAIMLER Consumer Goods 800,000 36,000,000
MAN AG Industrials 450,000 35,532,000

Major Movers

Name Sector Volume Volume (T-1) % Change
VOLVO Industrials 321,017,368 2,607,100 12213%
EDENRED Consumer Goods 17,041,933 473,473 3499%
RENAULT Consumer Goods 4,032,314 522,519 672%
RESOLUTION Financials 13,749,041 2,148,376 540%
RSA INSURANCE GROUP Financials 9,049,772 1,771,695 411%
DSG INTERNATIONAL Consumer Services 13,189,099 3,320,540 297%
INTESA SANPAOLO Financials 11,047,898 4,305,882 157%
DEBENHAMS Consumer Services 9,797,333 4,389,560 123%
UNICREDIT Financials 20,577,304 11,634,448 77%
VODAFONE Telecoms 36,873,106 22,891,305 61%

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