Tomorrow the Finnish parliament will say "yes" to the Spanish bailout, while all eyes are on the Friday's Eurogroup meeting. Today's big news was of course the deterioration of the Spanish bond markets after a lousy bond auction. The Spanish bond yields look like they are trying to break up from their recent range. Looking how the previous upswings have been, we could probably see 7.4-.7.5% in a week's time. If it breaks. I don't see any potential reason why it would not, unless the ECB acts.
Previously on MoreLiver's
Markets – Between
The Hedges
Recap – Global
Macro Trading
The Closer
– alphaville
/ FT
Market
Commentary – A
View from My Screens
Tyler’s US Summary – ZH
VIX
Implodes As Low Range, Low Volume, Low Average Trade Size Market Fails At Three Month Highs
Debt
crisis: live – The
Telegraph
The Euro
Crisis Blog – WSJ
FX Options
Analytics – Saxo
Bank
European
10yr Yields and Spreads – MTS indices
EURO CRISIS
Barroso's Rise Euro Crisis Means More Power for
European Commission
– Spiegel
European Commission President Jose Manuel
Barroso has a reputation for avoiding conflict. But as the euro crisis has
worsened, his power has increased. He is one of the few winners of the problems
facing Europe's common currency.
The euro graph of doom – The
Telegraph
With the natural remedy of exchange rate
adjustment ruled out, Germany thus becomes a deflationary doomsday machine for the rest of Europe, a leviathan which sucks the life
blood out of everyone else. It hardly needs me to say it's completely
unsustainable.
Tradable sectors in Eurozone periphery
countries did not underperform in the 2000s – voxeu.org
Some view uncompetitiveness in the Eurozone’s
periphery as the fundamental cause of the region’s crisis. This column presents
evidence that rising unit labour costs in the periphery were not a cause but
rather a symptom of the local demand shocks triggered by large capital inflows
in the 2000s.
With the focus on the problems of the eurozone,
it is easy to forget that many countries in Central, Eastern and Southeastern Europe have recovered from
the depths of the global economic crisis, and are now enjoying healthy economic
growth.
Firefighting has limits – bruegel
Unfortunately, the measures to handle
three-fold economic plus governance crises were not driven by a strategic
vision during the past two years, but by the determination to alleviate the
acute market pressures in a firefighting mode, given the strong political,
legal and other constraints. But the “hoping for the best” strategy may not
last long. Its chances have diminished with the deteriorating economic outlook
of the whole euro-area and the increasing market pressure on Italy.
EURO CRISIS: SPAIN
Spanish 10 Year Yield Back Over 7% Following
Ugly Bond Auction –
ZH
Spanish Bond Spreads Hit All-Time Record Highs – ZH
Spanish Spreads Hit a New Record – Sober Look
The driver for the widening today was a
difficult auction of Spanish bonds, though yields have been moving up for the
last few days.
The
collateral deal agreements
Bundestag approves Spanish bailout with large
majority – euobserver
So, if Spain asks for bond-buying
after the ESM is up and running, it seems that eurozone leaders would once
again have to decide whether it’s “appropriate” for the ESM to be senior in Spain.
OTHER
Preliminary international banking statistics at
end-March 2012 – BIS
Mark Carney: Summary of the latest Monetary
Policy Report – BIS (pdf)
Given these shifts in the alliances between
contributor and recipient countries we think that the popular assumption that
the Germans and the ECB (which requires agreement of the key factions within
it) will come through with money to make all of these debts good should not be
taken for granted.
EMEA Weekly, Week 30 – Danske
Bank (pdf)