Successful Bond Sales in Europe
18-01-2012
After several days of humiliation and controversy, the EU seems to be rebounding after successful bond sales by EFSF and several other Euro Zone members, including Greece and Spain, were held yesterday. It was just last Friday when the rating agency Standard & Poor’s lowered the credit rating of nine Euro Zone members, including France. On Tuesday, the EFSF was also downgraded. The debt auction that took place yesterday was considered a success however, and should shed a positive light on the Euro. The EUR/USD, EUR/CHF and the EUR/JPY all increased today in trading so far, with the EUR/JPY up by 0.063 percent at 97.92.
World Bank warns of nearing recession
The World Bank issued a less than enthusiastic statement regarding global growth and has warned developing countries to brace themselves for an economic crisis that will be worse than the recession of 2008. The bank’s chief economist Justin Yifu Lin claims that the upcoming recession will be far worse than the last and that a downturn in the global economy would be devastating for commodities from developing nations. As far as first world nations are concerned, the United States is already experiencing a decline in exports, especially by Europe, which have dropped by 6%.
Today’s economic calendar
Important events and reports in the United States, the UK and Canada headline the busy economic calendar for today. In the United States, the monthly PPI and the TIC Long-Term Purchases will be released. The Bank of Canada will be holding a press conference today and releasing its Monetary Policy report, while the UK report to watch for today is Claimant Count Change. All of these reports may produce some volatility in what has already been an unpredictable market over the past several days.
U.S. stocks rise
Wall Street became bullish yesterday after a slight turn in Europe’s fortune and a Chinese economy that is not sinking as fast as previously believed. The Dow Jones Industrial rose 60 points by the end of trading yesterday, closing out at 12,500. The S&P 500 and the Nasdaw Composite also increased yesterday by 0.36% and 0.64%. European stocks closed on a high note yesterday, with the French CAC 40 up by 1.40%, while the DAX in Germany increased by 1.82.
ECB ponders current debt strategy
Perhaps in response to the credit rating downgrade suffered by the EU recently, the European Central Bank is searching for different solutions to the European debt crisis. The recent downgrade of French and EFSF ratings could make bond yields significantly higher in the long term. Some members of the ECB are actually saying that the central bank may not be suited to solve the European debt crisis. The head of the ECB, Mario Draghi, recently stated that the European situation was grave and that the large amounts of debt accumulated by member states could cripple the European market.
