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Analysis: Sarkozy in fight for French AAA, political future
(Reuters) - Nicolas Sarkozy is in one of the most critical weeks of his presidency as he battles to mend his differences with Germany over a euro zone crisis that threatens both France's economic wellbeing and his own political future.
A spike in French bond spreads over German Bunds mirrors the rising pressure Sarkozy is under as the relentless advance of the euro area's debt crisis throws France's top-tier position in the bloc alongside Germany into question.
The premium investors demand to hold French 10-year bonds soared to 120 basis points over Bunds, three times the normal level, since Moody's said last Monday it was scrutinizing the outlook on France's triple-A rating in light of slowing growth and costly euro zone bailout commitments.
Penned in between hawk-eyed rating analysts ...
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The Weekly Bottom Line : 21/10/2011
The Weekly Bottom Line : 21/10/2011
HIGHLIGHTS OF THE WEEK
United States
European leaders are meeting in Brussels this weekend to try and come up with a plan to restore market confidence and secure the future of the common currency. But those hoping for a grand bargain are likely to be disappointed.
The real challenge is deeper than European policymakers have publicly acknowledged: how do you restore confidence in a union of countries that, with few exceptions, are highly indebted and relatively uncompetitive? A successful solution must involve the reform of European institutions themselves, as well as an understanding among member states over the responsibilities they hold to themselves and to each other.
The U.S. financial system, and the broader economy, will remain at ...
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Commodity traders: The trillion dollar club
NEW YORK (Reuters)- For the small club of companies who trade the food, fuels and metals that keep the world running, the last decade has been sensational. Driven by the rise of Brazil, China, India and other fast-growing economies, the global commodities boom has turbocharged profits at the world's biggest trading houses.
They form an exclusive group, whose loosely regulated members are often based in such tax havens as Switzerland. Together, they are worth over a trillion dollars in annual revenue and control more than half the world's freely traded commodities. The top five piled up $629 billion in revenues last year, just below the global top five financial companies and more than the combined sales of leading players in tech or telecoms. Many amass speculative positions worth ...
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Economic Data Analysis
Economic Data Analysis
A Tale of Two Summits
Market volatility linked to rising uncertainty over Euro area crisis response.
Sunday's summit to be supplemented with second on Wednesday. No sign of agreement and significant risks of postsummit market disappointment.
Euro area PMI's to show weakening in real activity, further declines threaten recession.
US Q3 GDP to post strongest outturn in a year. Consumption dominant driver.
Movements in equity, f/x and bond markets appear to have given up all pretence of looking beyond the immediate outlook for the Euro area crisis. This has resulted in significant volatility as Euro area officials have exhibited their characteristic market insensitivity ahead of Sunday's summit with manifold rumours of what may (or more often, may not) ...
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Watchdogs to keep closer eye on ultra-fast trading
(Reuters) - Global regulators published guidelines on Thursday to better monitor automated transactions while saying there was little hard evidence to justify reining in high-frequency trading.
Leaders of the world's G20 major economies last November called on the International Organisation of Securities Commissions (IOSCO) to mitigate risks from technological advances in trading technology.
The "flash crash" on Wall Street in May 2010 shocked small investors and rang regulatory alarm bells, helping to turn the political heat on high frequency trading (HFT) and the algorithms they use.
HFT accounted for 56 percent of U.S. and 36 percent of European equity volume last year, according to TABB Group.
IOSCO's recommendations stop short of the draconian measures some HFT firms fear, such as ...
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Risk aversion sends assets down broadly pre-EU Summit
European stock index futures fell on Thursday, as riskier assets across the board slumped with investors growing wary about taking risks ahead of a key European leaders' summit on Sunday.
The euro dipped as European policymakers struggled to reach consensus on the region's sovereign debt crisis, and concerns about the global economy hit industrial metals such as copper and commodity-linked currencies such as the Australian dollar.
The European stock index futures was down 1.3 percent, while futures for Germany's DAX and France's CAC-40 were also down more than 1 percent and financial spreadbetters called the FTSE 100 .FTSE to open as much as 1.2 percent lower. .EU .L
On Thursday, risk aversion prompted investors to trim cross-yen pairs, pushing the Aussie down 0.7 percent against the ...
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Analysis: Will falling commodities mean lower grocery bills?
(Reuters) - Grain prices are near their lowest in a year and global stockpiles are on the rise -- so meat, dairy and pasta prices are poised for a fall, right?
Not so fast. Food companies from Coca-Cola to General Mills Inc to Sara Lee Corp, which fought hard to push through price increases earlier this year, are unlikely to give them all back right away.
Beyond the practicalities that typically delay the pass-through impact of commodity costs through food producers, the fact is that companies are still in the process of recovering the profit margins they lost when prices spiked to record highs earlier this year.
And even with U.S. consumers fretting over recession, they tend to get used to higher prices over time, giving companies the confidence to maintain margin rather than grab for ...
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Europe trades in green on prevailing optimism over a crisis resolution after G20 assurances
Markets have started a new week today with prevailing optimism over the ability of European leaders to contain the crisis after the G20 endorsed the efforts to help Greece and secure the financial sector. Equities are trading positively on the hopes and the euro sustained the gains extending last week’s rally.
The markets have waited for quite a long time and the time for speculation is running out as the October 23 is assured the deadline for Europe to present its comprehensive plan to contain the debt crisis which was also set by the G20 financial chiefs in pressing Europe further to act decisively to the threat to the global economy and financial stability.
Markets have set high hopes for leaders and now they are not in a place to disappoint. The plan is to secure a wide range of ...
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What's Next for the Risk Appetite Rally? Key Factors to Consider from Europe and US
What's Next for the Risk Appetite Rally? Key Factors to Consider from Europe and US
Yesterday, one of the big questions was if the now 7-session risk-on rally would continue to have momentum or could it show some signs of topping off?
S&P500 - Hourly Chart - Week Ends on Strong Action as Trend Holds, To Top or Not to Top…
When looking at the S&P the big question is whether this upward trend -that has shown itself so clearly over the last nine trading sessions - can extend higher, or will it see some type topping off and a move to correction. We saw signs of that on Thursday as we retreated from the 1213 area, and here on my chart we fell below our shorter-term moving averages and found support at the 100-period ema. The bounce off that 100 moving average was a positive sign heading into ...
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