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Pre-Market Primer: Citigroup Misses, Spain Bond Yields Jump


Spanish bond yields head toward the precipice. Can the EU cope with another Greece, this time the size of Spain?

Futures pared gains this morning as Spanish bond yields approach unsustainable levels and Citigroup's (C) earnings missed Wall Street's expectations.

At 8:34 a.m. New York time, Dow futures were up 0.40% at 12,839.00. S&P 500 rose 0.34% to 1,369.70 and Nasdaq futures gained 0.39% to 2,704.00.

Spain's cost of borrowing passed 6% today, a level not reached since December. The benchmark 10-year yield hit 6.15%, 2-year bonds jumped to 3.70%. European equities rose moderately today.

Retail sales in the US increased by 0.8% in March, according to the Commerce Department. Economists expected a gain of 0.3%. The NY Fed reported that New York-area manufacturing this month weakened. The Empire State Manufacturing Survey fell to 6.56 from 20.2 last month.

China widened the band in which the renminbi can trade to 1%, an important step in liberalizing the Chinese currency. Washington regularly derides China's policy of keeping the renminbi at levels that politicians consider to be undervalued.

Crude oil futures fell 0.42% on concerns over global demand plus last week's weaker-than-expected Chinese GDP data and the situation in Spain.

Reuters reports that Exxon Mobil (XOM) CEO Rex Tillerson will be visiting Vladimir Putin's home in Russia to sign a deal with Rosneft (OP:RNFTF), Russia's state oil firm. The deal will give Rosneft access to projects in North America.

Citigroup reported worse-than-expected earnings this morning. Income fell to $0.95 from $1 per share and revenue declined to $19.4 billion from $19.73 billion a year ago. Analysts estimated that income would rise to $1.02 per share, but bigger-than-expected accounting charges eroded the bank's profit.

Toymaker Mattel (MAT) shares fell 6.33% after declaring that sales have fallen 9% in North America. Sales increased by 7% in overseas markets. Mattel declared a quarterly cash dividend of $0.31 per share for investors starting in the second quarter of this year.

Procter & Gamble (PG) raised its quarterly dividend by 7% to $0.56.

Oracle (ORCL) lowered the level of damages that it is seeking from Google (GOOG) in a suit over the latter's use of the Java programming language and APIs in the Android operating system. Oracle was asking for $6.1 billion, but scaled back its demand to $1 billion. Oracle is arguing that by giving Android to phone makers for free, Google is undermining Oracle's ability to license Java CEOs Larry Page and Larry Ellison are likely to be called as witnesses.

Twitter: @vincent_trivett
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