Archive - Jun 20, 2011 - Story

Everyone is on Rule 48 watch today because while speculation addicts in America was snoring, European markets were not doing that hot, leading to the now traditional exchange break. The reason per the FT: "NYSE Euronext’s European equities, bonds and ETFs markets opened later
on Monday due to technical problems, that knocked out trading on the
Paris, Amsterdam, Lisbon and Brussels." And from the horse's mouth - the NYSE "Boerse" Euronext said: “Due to technical issues the pre-opening phase for
regulated equities and bonds and ETFs, opening of the continuous trading
session will be delayed....Consequently, we have halted the regulated warrants and certificates
market given the unavailability of the cash markets." Translated: this is merely a test for an alternative ending for when the markets drop to that level where NYSE circuit breaks are triggered... anywhere between 1,200 and 2,400 points on the Dow Jones.

The "on again, off again, but totally clueless" European bailout whose fate may be cemented with a negative vote of confidence tomorrow in Greece, in what may be the most important offshore government decision in European history, continues to slaughter PIGS as the 10 Year Portuguese-Bund spread just blew out by 35 bps to a new all time high of 914 bps. From Reuters: "The premium investors demand to hold Portuguese 10-year government bonds rather than benchmark German Bunds hit a fresh euro lifetime high on Monday, due to ongoing concerns about Greece's immediate financing situation. Yields on bonds issued by euro zone's lower rated states were broadly higher after ministers delayed granting emergency loans for Greece. "There's general contagion in the periphery ... There's not a huge amount of trading but because the market is so thin prices are being marked wide on the screen," a trader said. "People are putting very defensive prices out there with the bid/offer being a lot wider."" And while risk is broadly off on the screen, this is wonderful news to Ben Bernanke, who as we have been saying for months now, will need crude to drop to at least $85, and the S&P to triple digits, to have a solid case for pushing on with more suicidal Keynesian policies (the cure for record debt is more debt^TM). Again from Reuters: "Crude oil prices fell by more than $1 on Monday, extending last week's losses, with risk aversion rising after euro zone finance ministers postponed a final decision on emergency loans to Greece. "The crisis in Greece has resulted in higher risk aversion, which is weighing on oil prices," Commerzbank analysts led by Eugen Weinberg said in a note.

Gold is being supported as default risk has increased after EU finance ministers failed to agree on a new Greek loan package. Gold priced in sterling rose to new record nominal highs this morning at £954.84/oz and the weakness of the euro has seen gold rise to touching distance (9 euros) from new record highs in euro terms at €1,088/oz. The cost of borrowing euros for three months in the interbank market continued to rise today with the three month Euro Interbank Offered Rate, or Euribor, fixed at 1.510%, up from 1.502%. Corporate borrowing costs in the U.S. as measured by U.S. swaps rose sharply from 20 to 26.99 last week - the highest so far in 2011. Societe Generale SA raised its third quarter gold forecast by $90 to $1,580 an ounce and silver by $3.50 to $42 an ounce.

A snapshot of the European Morning Briefing covering Stocks, Bonds, FX, etc.
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