The Eurozone leaders are releasing a statement on their agreements after marathon talks on Thursday and so far the market looks underwhelmed. First, the treaty will be for the Eurozone alone, with the UK and Hungary choosing to stay out. In addition, Germany appears to have blocked key points which could have rallied markets, with the issue of providing the ESM with a banking license a key point of contention. This had appeared on the initial draft but was swiftly deemed as ‘out of the question’ by the senior Eurozone sources. Continue reading →

The European Union Summit opens today as Eurozone leaders prepare to save their currency but it appears that some degree of expectations management is already underway, largely on what financial firepower can be deployed. Continue reading →

The euro managed to recover further overnight as markets prepare for the opening of the EU Summit tomorrow. More details on what will be proposed surfaced yesterday and the new focus appears to be on the financial firepower of the Eurozone’s current rescue mechanisms, in addition to the pursuit of changes in the Eurozone’s treaties and institutional framework. Continue reading →

After the market close on Monday, Standard & Poor’s took the surprise decision to put 15 Eurozone countries on credit-watch negative. Initially the fear was only the AAA countries would be put on watch but given the ‘systemic risks’ of the current crisis, the ratings agency chose to act on the entire currency union. Continue reading →

Expectations continued to build overnight for impending solutions for the Eurozone sovereign debt crisis. Several different papers have reported different plans, from enlarged ECB resources to even the Fed providing funding to the IMF. Eurozone leaders will start meeting today to set the groundwork for Friday’s crunch talks. Continue reading →

In Asian hours risk sentiment has been stable in the absence of any major news. Most Asian stock market indices are trading broadly flat with the Hang Seng down by 0.2%. EURUSD traded 1.3448-1.3489 and USDJPY traded 77.73-77-78. Continue reading →

Asian indices mirrored the rally late in Europe and the US on Wednesday. Key markets are up, with Hong Kong gaining over 5.5% as the combination of central bank liquidity injection and China easing spurred a risk recovery. The news helped offset a very poor manufacturing PMI in China. Brazil, another key emerging market, joined the party by announcing an interest rate cut of 50bp to 11%. Continue reading →

Risk continues to enjoy a healthy recovery as today’s Eurozone Finance Ministers look to approve Greece receiving the 6th tranche of aid today. More importantly, the details for EFSF leveraging are expected to receive the official go-ahead, though the marginal impact of these bits of ‘good news’ should be limited at best and investors will still cast a nervous eye towards this week’s bond auctions and Eurozone yields in general may not find too much respite. Continue reading →

The news for the Eurozone simply refuses to improve as Belgium was downgraded late on Friday and over the weekend, Italian newspaper La Stampa reported that the IMF is preparing a EUR600 bn loan for Italy in case the situation worsens. Early on Monday the IMF denied that any discussion was underway with Italy on any form of financing, and the numbers involved lack credibility as the IMF’s totally lending capabilities are far short of that sum. Continue reading →

The euro remained soft overnight but quiet holiday trading probably limited further losses and the breach of 1.33 against the dollar was only temporary. Investors remain nervous about the currency and although leaders are pushing for structural changes, short-term market-oriented solutions continue to be ruled out. German Chancellor Merkel, French President Sarkozy and Italian Prime Minister Monti met yesterday, but no new crisis-fighting measures were announced at the subsequent press conference. Continue reading →

The euro has managed to avoid further falls overnight but the recriminations will likely continue after yesterday’s alarming bund auction for Germany. Renewed fears about Germany’s debt situation are undoubtedly justified, but fears over the safety of France’s AAA rating did not help either. Strikingly, 10y bund yields closed 16bp higher. Continue reading →