Don’t ignore Spain and Italy

After a 4 day weekend in Europe and likely after Italian and Spanish banks having already spent their LTRO money, government bonds in Italy and Spain have no marginal buyer left. Yields in both countries are spiking again with the Spanish 10 yr yield at a 19 week high and the Italian 10 yr at an 8 week high. The Spanish stock market is falling to the lowest since March ’09 and is just 10% from the closing low seen that month. The cost of insuring against a Spanish default is just 20 bps from a record high. The European bank stock index and the iTRAXX European financial index are both at levels last seen in mid Jan. French business confidence held at the lowest level since Sept ’09 and IP and manufacturing production both were weaker than expected y/o/y. The bright spot is still Germany though as exports in Feb unexpectedly rose. In Asia, the BoJ did nothing and while China’s exports in March rose more than expected, Imports grew less than estimated. In the US, there was no new insight given by Bernanke last night on if and when he plans to change policy. The NFIB small business optimism index fell to 92.5 from 94.3, a 4 month low as Plan to Hire fell to zero from 4% and less companies Expect Better Economy and Higher Sales.

Print Friendly, PDF & Email

Posted Under

Uncategorized