European Central Banks (BoE & ECB) Take Different Paths
Global capital markets focused on issues related to Europe for the balance of the week, as better than expected economic data out of the US during the weak help lift riskier assets. Markets seem to price in in-line employment data after absorbing important monetary policy changes from the Bank of England. The disappointment over no-change [...]
Central Bank Funding Program Boosts Riskier Assets
The Risk on trade came back during the week as European stocks lead global equity markets higher. The coordinated action Thursday by 5 central banks helped the weeklong rally continue. The ECB, FOMC, BOE, SNB and BOJ announced this new action aimed at avoiding any new liquidity crisis. The action addresses the shortage of dollar [...]
ECB Rate Increase fails to lift the Euro
The main theme from this past week was a combination of worse than expected employment data out of the US and the tightening of European interest rates despite the back up in interest rates in the periphery of Europe and now Italy. The Euro moved lower after pushing above the 1.45 level, despite generally hawkish [...]
Currency Markets Remain on Edge, Amid Austerity Review
Capital markets during the week continued to be driven by headlines surrounding Greek austerity and the ability of the Greek government to reach targeted budget levels. During the week, the Greek government won the vote of confidence 155-143, which opened the way to the passage of the €80 billion austerity package in parliament next week. [...]
European Debt Fears Sway the Market’s Direction
The declines in riskier assets came as Greek debt fears intensified, after euro-zone officials failed to make progress on discussions about aid. Late in the week the markets experienced a reprieve, but fear remains in the market. Protests against further spending cuts increased frustration and turned violent in Athens. Greek yields moved to their highest [...]
Negative Sentiment Weight on Riskier Assets
The currency markets were driven multiple forces this week including developments in the EU periphery, and news flow related to the Greece aid package. Following the much anticipated signal for a July rate hike on Thursday ECB meeting, market participants took profits and placed their focus on Greece instead of future interest rate increase. Trichet’s [...]
Weak US Data Keeps Dollar on the Defensive
Market sentiment throughout the week remained cautious as market participants reacted to a stream of data that hurt investor sentiment. Manufacturing data, was weaker than expected in China, the UK, the EMU and the US. When combined with a decline in the employment situation in the US, the economic backdrop trumped any other news during [...]
Euro Caught in Conflicting Flow
The euro is caught in the midst of a conflicting flow of factors, as higher peripheral yields are countering the potential higher rates from the ECB this summer. The 2yr German-US yield spread tightened to 110 basis points moving down from 120 basis points at the beginning of the week. Speaking in Luxembourg on Friday, [...]
European Periphery Returns to the Spotlight
Peripheral yields soared on Friday with the yield on Greece’s 10-year government bond rising to record levels as speculation that of a default continued to gain steam. At the same time yields on the equivalent German note, eased to 3.12 per cent as Bunds were sought as safe havens. The debate over whether Athens should [...]
Currency Flows Dominate Capital Market Sentiment
Macro flows into and out of the US dollar continued to control capital movement during the week. Riskier assets such as commodities and equities gyrated as investors were pushed and pulled as the currency markets fluctuated. Market participants continued to focus on the need for a potential re-structuring of Greek debt, which has widen peripheral [...]
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