Market information

Friday, September 30, 2011

Yesterday, the German Bundestag approved an expansion of the European bail-out fund. The parliamentary approval was welcomed by the German banks, but banks are reluctant to increase contributions of banks to Greece. By approving the expansion, the banks have to devaluate the value of the Greek governmental paper by 21%. According to media reports Merkel expects an even higher contribution from the banks.

Research of Business Roundtable indicates that 140 CEOs of leading U.S. companies are more pessimistic about the recovery of the economy than previously thought. The index reflecting confidence in the economy fell from 109.9 points in the second quarter this year to 77.6 points in the third quarter, its lowest point since the fourth quarter of 2009. An index of over 50 points indicates that the executives still believe in economic growth.

Yesterday, the main stock exchanges in the U.S. changed slightly. Positive news on better than expected macro-economic figures and the approval of the German Bundestag with the expansion of the European bail-out fund caused the markets to show positive numbers at the opening, however concerns about the weak global economy and the European debt crisis gradually got the upper hand. The Dow Jones index gained 1.3%, the S&P500 increased by 0.8% and the Nasdaq lost 0.4%.

The 6M Euribor has remained the same at 1.75% and the 10Y Euro Swap has decreased by 3 basis points to 2.60%.

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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Thursday, September 29, 2011

Consumer confidence in the U.S. is gradually increasing. In a preliminary estimate the consumer index of the research institute The Conference Board rose to 45.4 in September. The final figure will be published next month. In August, the index recorded 45.2.

Today the German Parliament will vote on the support for the enlargement of the European rescue fund. In the meanwhile speculations about a restructuring of the Greek debt are becoming even more prominent. Yesterday, several sources reported that a group of seven euro countries, including Germany and the Netherlands, will demand a greater contribution of banks and other holders of Greek debt to the Greek aid package.

On the stock markets the uncertainty about the European debt crisis dominated. Yesterday, in Amsterdam, the AEX index fell by 1.32% to 278.31 points. In New York, the Dow Jones index decreased by 1.61% and closed at 11010.90 points. The main index, the S&P 500 decreased by 2.07% and closed at 1151.06 points.

The 6M Euribor decreased by 1 basis point to 1.75%. The 10Y Swap increased by 11 basis points to 2.63%.

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Wednesday, September 28, 2011

Last night Chancellor Angela Merkel announced that she is positive about the progress which the Greek government could achieve this year in coping with the public debt. She is convinced that Greece will meet the requirements for the sixth tranche of the bail-out plan. This tranche will amount to EUR 110 billion. An inspection team of the IMF and the ECB will leave this week for Athens and based on their findings, the euro zone countries and the IMF will decide whether the sixth tranche will be realized.

Rating agency S&P could probably be sued by U.S. regulators. Over-positive ratings are a reason for a possible lawsuit. It concerns a package of mortgages that proved to be worthless during the credit crisis. S&P is already under fire for their ratings of highly indebted countries like Greece and the U.S.

Both the U.S. and European stock exchanges closed positively yesterday. One of the reasons being that investors are confident that a solution for the European debt crisis is in sight. The Dow Jones index rose by 1.33%, the S&P 500 increased by 1.07% and the Nasdaq gained 1.2%. The AEX index rose yesterday by 4.5% and closed at 282.04 points.

The 6M Euribor has increased by 1 basis point to 1.74% and the 10Y Euro Swap has increased by 1 basis point to 2.52%.

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Tuesday, September 27, 2011

Credit evaluator Standard & poor's has indicated that an increase in the European emergency fund EFSF could lead to lower ratings of countries and institutions within the Euro zone. European leaders have indicated that they want to enforce the European emergency fund both quantitatively and qualitatively. However, how this should be realized remains unclear. Russia has already indicated its readiness to buy more bonds of the emergency fund.

The pressure on Europe is increasing sharply now the euro crisis is also starting to show effects on the growth of Korea, Brazil, India and China. The ministers of different countries have asked Europe to come up with a constructive policy that should provide a solution to the continuing debt crises.

In the third quarter of 2011, the merger and acquisition transactions in the US declined by 22% to USD 504 billion compared to the second quarter. The continuing crises have made companies reluctant to enter into acquisitions and prefer to hold cash for additional reserves.

The American and European stock exchanges have closed higher Monday. Investors are confident that there is a structural solution in sight to the European crises. The Dow-Jones Index closed 2.53% higher at 11.043,86 points. The S&P500 rose 2.33% and ended on 1.162,95 points. The Nasdaq gained 1,35% and closed at 2.516,69 points.

The 6M Euribor has declined 1 basis point to 1,73%. The 10Y Swap has increased 6 basis points to 2,51%.

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Monday, September 26, 2011

Monday, the euro reached a new 10-year low against the Japanese Yen. The Euro slumped around 8:30 to 102,20 Yen. Reason for this downfall is the continuing debt crises in Europe pushing investors to focus on safer currencies like the Yen.

Representatives of the EU and the IMF will go in debate this week with Greece to discuss the approach and progress of her debt crises. Purpose of this discussion is to determine whether Greece has made sufficient progress to be eligible for the increase of 8 billion of the emergency loan. The Greek Minister of Finance, Evangelos Venizelos, has indicated that his country is still fully committed to continue the budget-cuts and remain eligible for the additional emergency loan.

The European countries are working together to investigate the possibilities to make the European Emergency Fund (EFSF) more effective. The national parliaments will vote on the proposed increases of the emergency fund before mid-October. European Commissioner Olli Rehn of Monetary Affairs even spoke over a shorter period and expected that the agreements will be ratified before the end of September. Increasing the emergency, however, may expect a lot of resistance, particularly from Germany.

The 6M Euribor increased with 1 basis point to 1.74%. The 10Y Swap increased with 4 basis point to 2.45%.

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