Across Europe Uk's

Fundamental Analysis EUR Anti-austerity protestors are likely to hold massive demonstrations in May Day. Demonstrations in Athens that involve private and public sector strikes have already disrupted the public transport. However, the traditional violence is not expected as Greeks are likely to show their protest against austerity measures on Sunday when the general elections are due. USD Crude and Brent oil dropped as lifted US energy inventories outweighed supply concerns caused by export disruptions in Yemen, Sudan and North Sea. GBP Manufacturing sector in the UK performed worse than initially expected in April, reported research group Markit. UK's manufacturing PMI declined to 50.5 last month on a seasonally adjusted basis as compared to a March reading of 52.1. Experts ...

USD reversed earlier losses and is now trading higher against all of its major counterparts except for the JPY. The dollar index rebounded after making new lows for April as sentiment deteriorated. Negative news continued to flow out of Spain, this time with more ratings downgrades and data that confirmed a recession in the Euro zone's fourth largest economy. Equities are mostly lower with much of Europe in the red while US stock futures are currently pointing to a slightly lower open. UST yields are down across the curve as investors seek safety in Treasuries. The 10-year Treasury yield has currently shed 2.1bp to around 1.914%. On the data front, March personal income and spending rose by 0.4% and 0.3% respectively. The PCE deflator slowed to 2.1% y/y (prior 2.3%) and PCE core ...

Fundamental Analysis EUR Euro Area officials are going to Washington this week in order to demand larger war chest from overseas partners to prevent debt crisis as Spanish government struggles with surging borrowing costs. US though insists Europe can tackle crisis by its own financial firewall while Euro Zone representatives claim they already have done enough and deserve global help. USD Temasek Holdings is preparing to buy a part of Goldman Sachs Group's stake of Industrial & Commercial Bank of China (ICBC). Goldman Sachs is going to sell 3.55 billion of ICBC shares valued at USD 2.5 billion or about 4% of total amount traded in Hong Kong. ICBC shares lost 0.8% in Hong Kong on the news. Temasek has been raising holdings in China Construction Bank and Bank of China. GBP UK managed ...

European shares hit a six-month high on Wednesday as encouraging economic numbers boosted sentiment, while Italian banks gained after the Italian Central Bank made it easier for banks to boost their capital base. The FTSEurofirst 300 index of top European shares .FTEU3 was up 1.9 percent at 1,057.08 points after climbing to its highest since early August. Sentiment was boosted by data showing that the manufacturing sector in Germany, China and the United States were in better shape than expected but strategists warned not to read too much into the data for Europe. "Keep in mind that we are only in the early stages of implementation of the austerity measures across Europe, so there is pain yet to come. As such, we would not be carried away by these numbers," said Duarte Caldas, market ...

Economic Data Analysis : 06/01/2012 A New Direction for 2012? Global risk sentiment boosted by global PMIs and US employment gains. Euro crisis still dominant theme. Neither Merkel-Sarkozy nor ECB to alter landscape. MPC to delay extending QE until next month's meeting. The first trading days of 2012 brought more upbeat news than the gloomy prognostications of end-2011 anticipated. For sure, risks of a further intensification of the Euro area crisis continue to hang over the global outlook. However, this week has seen improvement in global PMIs and record gains in US employment (albeit more subdued in the official payrolls release). This has boosted risk sentiment and key equity markets have risen in the first week of this year, with the relative outperformance of the US ...

Economic Data Analysis Reality Trumps Shop in Euro Saga Markets disappointed with European package and surveys suggest recession. UK growth outlook dependent on Euro area, weakness to be highlighted in domestic indicators. US Federal Reserve to keep policy unchanged on signs of improving outlook. At the time of writing, the details on the EU Summit are scarce, but the direction of a broad ‘fiscal compact' seems to be clearly emerging. Yet markets are underwhelmed by what appears to be a reaffirmation of the Stability and Growth Pact principles. They also remain disappointed following ECB President Draghi's press conference yesterday, where he appeared to go out of his way to close off the possibility of using the ECB's balance sheet to help prevent contagion across the Euro ...

Economic Data Analysis A Man with Plan A, or a Man with a Plan? Autumn statement to count cost of weaker growth outlook on UK public finances. Euro area finance ministers meeting to progress governance and treaty changes. US payrolls and ISM indices to judge pace of Q4 expansion. The importance of the 'failed' German Bund auction this week may have been exaggerated - 9 have failed this year alone. However, the rise in Bund yields and fall in the euro raises fears that capital is now seeking safety outside of the Euro area and not across it. Merkel, Sarkozy and Monti's meeting this week stated that salvation is still sought through long-term fiscal integration and treaty change - the main focus for the 9 December Summit. As such, the coming week's finance ministers meeting ...

Economic Data Analysis The Italian Job Greece and Italy have new governments, yet confidence in the Euro area remains thin. Euro area Q3 GDP overshadowed by events and more recent survey evidence. BoE Inflation Report to signal risks to the UK outlook and chances of more QE. US releases retain more upbeat tenor, but risks from “super committee” discussions. Despite the forced resignation of Berlusconi, market sentiment in Italy and across the Euro area remains exceptionally febrile. The spread on Italian debt rose further, while Spanish and French yields also pushed higher. Longer-term economic structural reform across the Euro area is necessary to improve the zone's prospects, but it does not appear sufficient. The loss of confidence has become deeply corrosive, ...

The trigger for yesterday's slide in the EUR was when LCH Clearnet raised its margin requirements for Italian bonds, forcing some banks to put up additional capital or sell their positions. Most chose the latter and thus pushed up the yield on 10-year Italian BTPs above 7% to a new EMU record. The EUR collapsed with Italian bond prices, ending the period of consolidation that the FX markets have seen since early last week. Economic News EUR - Italian 10-year Bonds Yielding 7% The EUR received a small bounce following Berlusconi's resignation though the gains in the EUR only provided EUR bears an opportunity to enter at a more attractive price. Concerns over the political situation in Italy have not supported risk sentiment with European bourses shedding more than 2% on average. The ...