Treasury prices edged down slightly on Monday, pushing yields higher, as German Chancellor Angela Merkel and French President Nicolas Sarkozy said they made progress on a pact to toughen budget rules across the euro zone..
Yields on 10-year notes 10_YEAR +0.97% ,which move inversely to price, rose 1 basis point to 1.98%. A basis point is one one-hundredth of a percentage point.
Merkel said leaders’ intention was that no country leave the euro and Sarkozy called for negotiations on the fiscal pact to be wrapped up in coming days.
Merkel and Sarkozy’s meeting in Berlin is a prelude to a Jan. 30 summit of European leaders. Merkel and Sarkozy have thrown their support behind a plan to effectively draft a new treaty that requires all 17 euro-zone nations to sign up to stricter and more enforceable fiscal rules. Read story on Merkel, Sarkozy.
Here, as a service to you, are the five big things that have happened so far in Europe this morning that might or might not put us all in the poorhouse:
1. Merkozy Speaks! And they don’t say much. In their 100th joint press conference (as frequent press-conferencers, they get the next press conference free), Angela Merkel and Nicolas Sarkozy didn’t say a whole lot. Which is probably a good thing.
2. Yields Fall. Italian, Spanish, Portuguese, Austrian and French 10-year bond yields are all lower this morning, according to Tradeweb. Which is not to say they’re actually low or anything. Italy is still paying north of 7% to borrow for 10 years, and Spain is paying about 5.5%. But at least things aren’t getting worse.
3. You Will Pay Us, And You Will Like It. Germany paid -0.0122% for new six-month bills this morning, meaning people are paying Germany for the privilege of lending it money. That’s good news for German borrowing costs, but may show people are scrambling for liquid, safe assets, which is less encouraging.
4. Speaking of Scrambling For Cash: The ECB said use of its overnight deposit facility set yet another new record, another sign of interbank lending stress in the euro zone. European banks deposited €463.565 billion ($589.61 billion) in the facility last Friday, up from €455.299 billion parked overnight Thursday.
5. UniCredit Still a Hot Mess. Italian bank UniCredit is still melting down, recently trading 10.5% lower at 2.30 a share. UniCredit has lost 44% in less than a week as it raises capital to meet regulators’ standards.
The Obama Administration, in conjunction with federal regulators and led by the overseer of Fannie Mae and Freddie Mac, are very close to announcing a pilot program to sell government-owned foreclosures in bulk to investors as rentals, according to administration officials.
There are currently about a quarter of a million foreclosed properties on the books of Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) and millions more are coming.
Idenix surged 44% to $10.16 in recent premarket trading in the wake of fellow Hepatitis C drug developer Inhibitex’s planned $2.5 billion purchase by Bristol-Myers Squibb Co. But Brean Murray Carret says Idenix’s effort in the space “will ultimately yield results that do not match what we have become accustomed to” from others. The investment bank keeps its 7-month-old sell rating and $3 price target on Idenix, noting that “although the gut reaction will be to view Idenix as a similar investment as Pharmasset Inc. and Inhibitex, we strongly caution against viewing these assets as being equivalent as we believe there are deficiencies in the clinical profile” of Idenix’s effort. Inhibitex soared 148% to $24.50 in recent premarket trading, and Achillion Pharmaceuticals Inc. is also receiving a boost, soaring 31% to $10.24.
GlaxoSmithKline’s American depository shares are down 2.9% at $44.86 premarket after the company said it completed Phase III studies for Relovair. The results are mixed and some risk is involved, according to Shore Capital. “The data are probably not as clean as we would have liked and although the lack of superiority versus Advair probably has little relevance to approvability, we believe that it could limit [Relovair’s] commercial positioning,” the firm says.
Questcor Pharmaceuticals Inc. said the number of paid prescriptions of its treatment for the flare-up of multiple sclerosis more than doubled in the fourth quarter from a year earlier. Shares rose 9.9% to $42.80 in premarket trading as the pharmaceutical company said H.P. Acthar paid prescriptions for MS rose about 165% in the latest period to an estimated 935 to 950 paid prescriptions.
IPC The Hospitalist Co. lowered its full-year guidance and gave fourth-quarter guidance below analyst expectations, noting unexpected softness in patient volumes in certain practices hurt revenue in the latest quarter. Shares slid 16% to $38.34 in premarket trading as the provider of hospitalist services also said the continued use of temporary staffing at several of its larger practices, and start-up costs to open several new practices, hurt profits.
Lululemon Athletica Inc. said Friday that founder Chip Wilson would step down from his position as chief innovation and branding officer Jan. 29 but will remain chairman of the yoga-wear maker. The company’s common stock traded in New York was down 2.1% at $52.56 in light premarket trading.
Vivus Inc.’s shares surged 18% to $12 premarket as the pharmaceutical company said the U.S. Food and Drug Administration has asked the company to remove the restriction against use by women of childbearing age on the proposed label for the weight-loss drug Qnexa.
Biotechnology firm Acorda Therapeutics Inc. said it expects sales of its Ampyra drug to rise to $255 million to $275 million in 2012, up from $210 million last year. Shares edged up 0.3% to $25.75 premarket.
Economics, FedSpeak and Eurozone Follies:
Monday
Angela Merkel and Nicolas Sarkozy meet and greet
Atlanta Fed President Dennis Lockhart speaks
Consumer credit for November
Tuesday
NFIB Small-Business Optimism Index for December
San Francisco Fed President John Williams speaks
Cleveland Fed President Sandra Pianalto speaks
Kansas City Fed President Esther George speaks
Wenesday
Chicago Fed President Charles Evans speaks
Atlanta Fed President Dennis Lockhart speaks
Philadelphia Fed President Charles Plosser speaks
Fed Beige Book report
Thursday
ECB interest-rate decision
Weekly jobless claims
Retail sales for December
Friday
International trade data for November
Import and export prices for December
University of Michigan consumer sentiment for January
Richmond Fed President Jeffery Lacker speaks
Chicago Fed President Charles Evans speaks
St. Louis Fed President James Bullard speaks
Earnings:
Monday
Alcoa
Tuesday
None
Wednesday
SUPERVALU
Lennar
Thursday
None
Friday
J.P. Morgan