Market information

Wednesday, August 31, 2011

Yesterday, the European Commission in Brussels announced that a majority of the indicators representing confidence in the economy, decreased further this month. In addition, rating agency S&P announced that economic growth will drop, but a recession is not expected. Particularly for countries like Germany, France and Spain the forecasts are more pessimistic than before.

The minutes of early August which were published yesterday from a meeting of the Fed show that the Fed has a number of possible measures at hand in order to stimulate the economy. The minutes showed that many members of the Fed do not believe that new measures will reduce unemployment and stimulate economic growth; nevertheless, they are open for additional measures.

The publication of the minutes of the meeting of the Fed has had a positive impact on the U.S. stock exchanges. Yesterday, the Dow Jones index rose by 0.18%, the S&P 500 gained 0.23% and the Nasdaq has increased by 0.55%.

The 6M Euribor has remained the same at 1.75% and the 10Y Euro Swap has decreased by 4 basis points to 2.82%.

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: update@zanders.eu.

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Tuesday, August 30, 2011

The IMF's previous forecast of 2011 and 2012 for the growth of world economy has been decreased. In particular, the growth in the U.S. will drop. This year the IMF expects the U.S. economy to grow by 1.6% and next year, a growth of 2.0% is expected. Previously, these percentages were respectively 2.5% and 2.7%. In the euro zone a growth of 1.9% is expected for this year, instead of the previously mentioned 2.0%. For 2012, the IMF expects a decline in the growth to 1.4% where previously a growth of 1.7% was expected.

Due to the decline of economic growth in Europe, the ECB fears the possible risk of inflation. This was claimed yesterday by the president of the ECB, Jean-Claude Trichet, in the European Parliament. Analysts expect that this is an announcement for adjusting the interest rate. Earlier this year the ECB increased the interest rate up to 1.5%. On September 8, the ECB will present a new interest rate decision.

Partly because of the limited damage caused by Hurricane Irene, and better than expected figures for U.S. consumer spending, the stock exchanges in the U.S. showed positive figures yesterday. The Dow Jones index gained 2.3%, the S&P500 closed 2.8% higher and the Nasdaq has increased by 3.3%.

The 6M Euribor has increased by 1 basis point to 1.75% and the 10Y Euro Swap has increased by 3 basis points to 2.86%.

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Monday, August 29, 2011

According to the Chief of the European emergency fund, Klaus Regling, the debt crisis can be resolved in about 2 or 3 years. Regling indicated that reforms are still needed to improve the financial position of countries. "The euro will survive the crisis because both strong and weaker countries have an interest in it”, Regling said.

Christiane Lagarde has indicated, that to avoid a looming banking crisis, banks have to strengthen their reserves as soon as possible. According to Lagarde, banks must attract the needed additional capital in the market. If this fails, the European emergency fund could possibly be used to support the banks.

President Obama and Lagarde have talked about extra incentive measures, to support the world economy. In their first consultation, since the arrival of Lagarde, the most important subjects were the importance of a healthy trade balance with emerging markets and the need to balance the government budget. Fed Chairman Bernanke also indicated that new support for the world economy is necessary, but according to him, this support is outside the responsibility of the Fed.

The 6M Euribor has decreased by 1 basis point to 1.74%. The 10Y Swap decreased by 1 basis point to 2.83%.

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Friday, August 26, 2011

In Spain, the government reached agreement with the main opposition party on a limit of the governmental debt. As of 2020 the deficit of the Spanish government may not exceed 0.4 percent of GDP. This measure was implemented due to heavy pressure from France and Germany.

In Spain, France and Italy, the prohibition on short selling was extended. Supervisors emphasize the markets currently are too volatile to lift the prohibition. The prohibition is extended until September 30 and may be lifted sooner, but may also be extended.

Yesterday, the stock exchanges in the U.S. showed negative numbers. One reason is that investors anxiously await today’s speech of Ben Bernanke, chairman of the Fed. The possible extension of the short-selling prohibition and the disappointing unemployment rate in the U.S. also caused a negative sentiment on the stock exchanges. The Dow Jones index lost 1.5%, the S&P500 closed 1.6% lower and the Nasdaq decreased by 2%.

The 6M Euribor has increased by 1 basis point to 1.75% and the 10Y Euro Swap has decreased by 4 basis points to 2.84%.

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Thursday, August 25, 2011

The German consumer confidence will probably drop in September according to a forecast of the German research group GfK. According to this forecast the index for consumer confidence will drop to 5.2 in September. Currently the index notes 5.3. The drop of the consumer confidence is in line with analysts’ expectations.

Investors are looking forward to the press conference of the chairman of the U.S. Federal Reserve (FED) Banks (FED), Ben Bernanke, on Friday. Investors are hoping that the FED will step up the financial stimulus. Expected is that the FED will stimulate the U.S. economy by another round of bond purchases (quantitative easing).

On Wall Street the stock markets increased. The main index, the S&P 500, increased by 1.31% to 1177.60 points. The Dow Jones index increased by 1.29% to 11,320.71 points. In Amsterdam the AEX index closed at 281.5 points, an increase of 1.2%.

The 6M Euribor remained unchanged at 1.74%. The Euro 10Y Swap increased by 9 basis points to 2,88.

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