Market information

Thursday, May 20, 2010

The debate of Angela Merkel and with it the German decision to ban the speculation has had a major impact on the financial markets. This morning the euro has fallen to its lowest point in four years. As a result, stock prices plummeted, the demand for state and corporate bonds decreased significantly, and the credit derivatives markets fluctuated greatly. Investors were surprised by the debate and in reaction doubts in the stability of the eurozone increased. This result was the opposite of what was intended with the decision.

Against all odds, the low level of the euro compared to the dollar does not boost the export of euro countries outside of the eurozone. In case there is an increase, it is of short duration. Dutch export mainly focuses on other euro countries and the impact of a decrease of the euro will not be big, according to an analyst at Rabobank.

Today will show whether investors still believe in the Spanish economy. Spain will try to sell ten-year bonds at 4% interest for an amount of between EUR 2.5 billion and EUR 3.5 billion. Ealier this week Spain tried to sell bonds with a maturity of 12 to 18 months, but sales were significantly lower than initially was expected. Then EUR 6.44 bln was raised while the expected range was between EUR 6.5 billion and EUR 7.5 billion.

The 6 month Euribor remained unchanged at 0.98%, and the 10 year Swap increased by 2 basis points to 3.05%.

In the attachment below, today’s market data on money and capital market rates as well as other rates are presented. For more history of these rates or other rates feel free to ask: .(JavaScript must be enabled to view this email address)

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