The European leaders meet yet again today to try and agree on the new fiscal compact agreement and to set up the new €500 billion European Support Mechanism. We’ll no doubt see European leaders insisting on further commitments from the Greek government in exchange for a another bailout package. Rumours over the weekend suggest that delegates had been pushing to put an EU official in charge of Greek fiscal policy with full veto powers over the government’s spending decisions. This of course has brought tensions between Athens and the other member officials to new highs and further progress in this area will almost certainly lead to private sector investors taking a loss on any Greek debt they hold.
Reports suggest a haircut of 60% is close to being agreed. Progress on the Greece matter should ease pressure on other periphery nations in a week that sees Italy, Belgium and Spain sell €22 billion of debt securities. Italy is due to auction €6 billion of 5- and 10-year debt today and will be hoping that it can sell 10-yer debt at yields around 6%.
With so many summit disappointments in recent months, markets are watching events in Europe nervously, which is why stocks were falling in early trading. All this has hit the Euro overnight, taking it from its high of $1.3235 to levels around the $1.3150. The euro has also eased lower against sterling this morning, but GBP gains have been limited as the latest Hometrack survey showed UK property prices stagnating in January.
The end-of-month EU Commission surveys are expected to show a further improvement in business conditions throughout the Euro Zone in January, which would be consistent with the view that any recession experienced will be much shallower than that seen in 2008-2009.
Data from the US came through a little weaker on Friday but we have seen little movement GBP-USD.
All in all a reasonably quiet looking week ahead with just the PMI numbers from the UK and Europe and the US nonfarm pay roll figures on Friday.
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Posted in Daily Market News on May 30 2014
This morning the Euro has fallen against the Pound as the news from the Portuguese bond market was released. The 10-year bond yield has hit a new high at 15.25%, with investors growing their concerns on a possible contagion. Many analysts believe Portugal will need a second bailout.VIEW FULL ARTICLE
Posted in Daily Market News on Jan 27 2012 by alex