As Eurobonds Will Be

Trading in the London Session was choppy with the market unwilling to take any clear direction as we lead up to tomorrow's informal EU summit. The market toyed with the idea of Eurobonds (they like that idea and risk assets may rally tomorrow on any signs they are on the horizon.) Then they focused on the prospect of a showdown between Germany and France, Europe's de facto leaders, which caused a mild sell off. Right now the chances of the latter happening are more likely especially since Merkel is unlikely to be re-elected next year if she agrees to Eurobonds (read Germany guaranteeing the bulk of Europe's debt), which would never fly with German voters. Although the EU President said that everything is on the table for discussion tomorrow, he also said that no concrete measures will be ...

Precious-Gold dropped as worries in markets after Fitch downgrade to Japan and before an awaited informal EU summit tomorrow damped demand on the yellow metal. Concerns increased after Japan had its credit ranking slashed by Fitch which revealed that Japan`s slackening response to tackling its public debt burden is the key reason behind the downgrade. On the other hand, worries from the euro area continued amid speculations there would be frictions among European leaders at their meeting in Brussels tomorrow. While the newly elected French President Francois Hollande will propose introducing Eurobonds to ease the tensions in European bond markets, German Chancellor Angela Merkel said she will not be shy to reject Hollande`s idea of introducing Eurobonds. Hence, with possible ...

European shares rise on Tuesday midday trading on plans from China to bolster growth and on hopes European leaders will do more to tackle crisis when they gather at tomorrow`s informal EU Summit. China is looking forward to accelerating the consent of infrastructure projects as well as allocating construction funding to reinvigorate growth. On the other hand, before the awaited EU summit on May 25, German and French Finance Ministers said on Monday they agreed "to do everything to keep Greece in the euro club." Tomorrow`s summit will tackle fiscal crisis and discuss the Greek issue, where new measures such as launching Eurobonds are expected to be on the table. However, still there are worries after Spain had sold debt with higher yield and the OECD lowered euro area growth forecasts. ...

German Chancellor Angela Merkel is under pressure from German states and Social Opposition to introduce a shared debt liability which is so-called "Deutschland bonds" to ease the country`s budget deficit. Opposition parties may press on Merkel as they know she needs their support in the coming elections. This proposition moves parallel to calls from French President Francois Hollande to launch Eurobonds to cool down the region`s fiscal woes. However, Merkel said yesterday she will not be shy to reject Hollande`s idea of introducing Eurobonds at the informal EU summit taking place in Brussels tomorrow.

Precious-Gold dropped after approaching $1600 levels amid possible conflict between European leaders over measures to tackle the debt crisis. Yesterday, German Chancellor Angela Merkel said she will not be shy to reject Hollande`s idea of introducing Eurobonds at the informal EU summit taking place in Brussels tomorrow. With possible frictions between European leaders crisis may intensify more which will probably make investors refrain from buying commodities and risky assets. The shiny metal advanced yesterday after Chinese Premier Wen Jiabao said he will give utmost determination to boost growth, while German and French Finance Ministers said they agreed "to do everything to keep Greece in the euro club." Gold is currently trading around $1582.06 an ounce after recording a high of $ ...

Sunrise Market Commentary - Fixed Income: limited profit taking on core bond markets - Global core bond markets fell prey to some profit taking in a thin, dull trading session. However, given the strength of equities, bond losses were very limited and occurred at the onset of trading. Today, the eco calendar remains thin and the profit taking might go some further in the run-up to tomorrow's informal EU Summit. - Currencies EUR/USD rebound on profit taking - The correction in EUR/USD was prolonged, but the euro gains were modest and mostly technical in nature. The UK inflation report is the eye-catcher of the day as it may influence sterling. However, overall trading might again be thin ahead of tomorrow's euro Summit. The Sunrise Headlines - US Equities rose for a second ...

Fundamental News Today’s highlights: · CPI (MoM) (GB, 09:30 GMT) · BOE Inflation Letter (GB, Tentative) · Existing Home Sales (U.S., 15 :00 GMT) The U.S. labor market is set to strengthen this year, a survey published by the National Association for Business Economics said Monday. The survey of 54 economists said non-farm payroll increases will average 188,000 per month this year, up from the prior projection of 170,000. The jobless rate is expected to fall to 8 percent by the fourth quarter of 2012. Japan’s foreign investments and assets grew to the second-highest level on record as companies used the high yen to make acquisitions abroad, a trend that may help them cope with stagnant demand at home. Investments abroad grew 3.3 percent to 582 trillion yen ($7. ...

Nervousness underpinned price action today. Despite voices from throughout Europe attempting to reassure the market that Greece will remain in the euro, stock markets in Asia didn't significantly build on their opening gains and the euro slowly drifted lower throughout the session. Why is the market behaving like this? In one word – caution. Investors are acutely aware that the talk from Europe may just be that, and when push comes to shove nothing may happen. And, in this case that is a very bad thing considering the fate of so many economies (both in Europe and elsewhere) hang in the balance. Whilst there are many different views, most economists agree that letting Greece slipe away may prove to be more costly than keeping it in the Eurozone. Thus, the market wants reassurances that ...

It has been a lacklustre day post the G8 meeting at the weekend (yawn), the drop in Mark Zuckerberg's net worth seems to be more of a talking point than the continuing Eurozone crisis. But, the Eurozone banking index gives it all away. Bankia, Santander and the usual Spanish suspects all turned lower as we headed into London's lunchtime, which dragged the overall European banking sector down to its lowest level since November 2011. Within a matter of hours EURUSD followed suit and is making fresh lows of the day at 1.2730 (at the time of writing). Official EU disappointment Although a temporary bottom may be in place at 1.2624 in EURUSD, the G8 summit highlighted a couple of things that remain negative for the single currency: 1, how divided the Eurozone (and the world) is about how to ...