Here's my summary of the key news overnight in 90 seconds at 9 am, including signs the European debt crisis is taking another turn for the worse as the euro weakened on fading hopes for any form of substantial solution from this Thursday night's crisis summit, the region's 20th such 'make or break' summit in the last three years.
The euro fell below US$1.25 and both Spanish 10 year bond yields and Italian 10 year bond yields rose substantially on fear about capital flight within the euro zone. The Spanish 10 year bond yield rose 20 basis points to 6.85% and was near 7% in overnight trade. The Italian 10 year bond yield rose 15 basis points to 6.17%.
This followed startling new comments from German Chancellor Angela 'Nein' Merkel, who said she did not expect to see shared liability European debt 'as long as I live'. See more here at Reuters.
Most of the rest of the Euro-zone has called on Germany to accept the issuance of shared liability Euro-zone bonds whereby the stronger Euro-zone nations guarantee bonds issued by the weaker Southern European nations. Many believe this move, along with the creation of a fiscal union and a banking union, are needed to avoid a breakup of the Eurozone.
The Dow rose 0.5% overnight after house price deflation of 1.9% in April from a year ago was not quite as bad as expected. See more here at Bloomberg.
The focus will be on comments coming out of the European summit over the next couple of days, however leaders are downplaying the chances of any major result. See a preview here on Reuters.
The New Zealand dollar strengthened to near four month highs vs the euro of 63.4 USc and is set to rise to fresh record highs of over 64 USc. See Mike Jones' currencies report here.
No chart with that title exists.
6 Comments
Moody's apparently set to downgrade Spain to junk - http://www.businessday.com.au/business/world-business/spain-poised-for-…
Ok, I just had to sit through this with my wife, now its your turn.
http://www.ted.com/talks/brene_brown_on_vulnerability.html
http://www.ted.com/talks/brene_brown_listening_to_shame.html
One can't help wondering if these European Titans are just going round in aimless circles like moths arround a flame. They seem to be throwing good money after bad to try to avoid the inevitable reality that the Euro currency is a flawed concept that must ultimatly fail. They would be better advised to accept this reality and manage the process as carefully as possibly. Maybe they have already reached this conclusion behind closed doors already and they are just treading water until they have developed the best way to unwind the Euro currency mess?
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.