Overview: Futures positive this morning as Japan’s nuclear crisis made a step forward and U.N. allies took control of Libya’s airspace.
U.S.: Existing home sales will be released today set at -4.7%E MoM v +2.7% prior. The estimated decline considers the significant rise in January versus the pending sales in that month. LIBOR-OIS has widened out to 16.9bp (+5bp on the year).
Europe: Portugal’s government will present its fiscal austerity plans to Parliament today. Portuguese PM Socrates has warned of his resignation if the plan does not get passed while the main opposition party which has reached majority position has shown no support for the cost-cutting. The potential political turmoil will make a foreign bailout likely. Sunday’s German regional election in Saxony-Anhalt, showed less support for Chancellor Merkel’s CDU party which lost ground in the victory. Its lead in the region’s coalition will likely remain the same, but foreshadows a greater potential upset in the next round of election on March 27. Germany projected a tax revenue increase of almost 10% in February and kept estimates of GDP growth at +2.3%. Greece’s current account deficit increased in January to €2786MM v €1890MM in December, showing still weak efforts towards fiscal discipline. The EU meetings on bailout measures will focus on Thursday and Friday, but some EU finance ministers are set to meet today. Market is priced for success as SOVXWE has tightened in all the way back to 165bp.
MENA: U.N. allies began airstrikes on Libya this weekend, taking control of the country’s airspace and stopping Qaddafi’s advance on rebel outposts. Meanwhile, Syria and Yemen continue to see social unrest, adding to upward pressure on oil prices.
Asia: Japan managed to gain control of two of six nuclear reactors, but the situation still remains dangerous despite the accomplishment. The G7 intervened in foreign exchange markets last Friday in attempts to calm the tormented yen. France’s finance minister announced that there is no set schedule for further intervention. Taiwan’s export orders grew only 5.33% YoY v 13.7%E YoY, the lowest growth in 16 months, owing to the drop off in Japanese demand due to the earthquake and a simultaneous softening demand in China.
From Brian Yelvington at Knight Capital