Market information

Wednesday, November 30, 2011

S&P downgraded the status of the Rabobank from triple A to AA stable. Also other large international banks such as Citigroup, Bank of America, Goldman Sachs and Morgan Stanley had their status downgraded. Bert Bruggink, Chief Financial Officer of the Rabobank, said in an interview on BNR news radio this morning not to be surprised. Earlier this year S&P announced an adapted calculation method for banks in which banks can no longer get a triple A status.

Last night, the Euro-area finance ministers agreed on the EUR 8 billon fund to Greece. This fund saves Greece from a bankruptcy this year. The finance ministers also approved enhancements to their bailout fund while backing off from setting a target for its firepower and seeking a greater role for the IMF in fighting the debt crisis together.

The stock markets in New York Tuesday closed positively for the second day in a row. The Dow Jones index closed 0.3% higher at 11,555.63 points and the S&P 500 index closed 0.2% higher at 1,195 points. Asian shares drop after two days of gain. The Nikkei index in Tokyo ended 0.5% lower at 8434.61 points.

The 6M Euribor remained unchanged at 1.71%. The 10Y Swap increased by 6 basis points to 2.78%.

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, November 29, 2011

The European Central Bank (ECB) purchased for 8.58 billion EUR government bonds on the secondary market last week. This figure shows that the ECB continues to buy bonds, the ECB now has 203.5 billion EUR worth of government bonds on its balance sheet of countries affected by the current debt crisis.

Belgium raised 2 billion EUR in government bonds from the market yesterday. The country paid 5.659% for a ten-year bond. This rate was lower than would be expected based on market interest rates from last week. The yields on Belgian government bonds were rising last week, especially after the downgrade of S&P to AA.

The major stock exchanges on Wall Street gained yesterday. The Dow Jones closed 2.59% higher at 11,523.01. The S&P 500 closed with a gain of 2.92% at 1,192.55 and the NASDAQ closed at 2,527.34 (+3.52%). The AEX in Amsterdam closed with a gain of 3.90% at 285.70.

The 6M Euribor remained unchanged at 1.71%. The 10Y Swap remained unchanged at 2.72%.

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Monday, November 28, 2011

The International Monetary Fund (IMF) has indicated that they are not in negotiations with Italy. With this statement, the IMF spokesman rejected various media reports that reported last week that the IMF was planning an aid package with a volume of EUR 600 billion. According to the media, Italy could borrow with this aid-package at a rate of 4-5%. The rumors led to higher stock markets in Asia but are now denied by the IMF.

The German newspaper Die Welt reports today, based on information from EU senior diplomats, that Germany is considering issuing elite-bonds (AAA-Bonds). Germany would issue these new bonds together with the Netherlands, France, Finland, Luxembourg and Austria. Chancellor Merkel, would only consider the issuance of these elite bonds if the 27 EU Member States fail to agree on new EU treaties on controls on public finances and fiscal rules.

The European Union was content with the Belgian agreement on the reduction of the state budget. The new Belgian government wants to decrease the budget deficit by 2.8% next year in order to comply with the deficit limit of 3% as stated by the EU.

Jurgen Stark, the leaving chief economist of the ECB, is deeply concerned about the independence of the ECB. According to Stark, the political pressure on the ECB is very large and the political debate is focused on extending the tasks of the ECB. "This not only affects the independence of the ECB, it also endangers this." said Stark. According to Stark, it is not the role of the central bank to correct the markets as they require higher interest for loans to countries that are in debt. According to several sources Stark resigned from the ECB because of dissatisfaction with the buy-back policy. In his farewell interview he said that neither the purchase of bonds, nor the reprinting of money will solve the debt crisis.

6M Euribor increased by 1 basis points to 1,71%. The 10Y Swap increased by 7 basis points to 2,72%.

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Friday, November 25, 2011

According to a second estimate performed by the British office for national statistics the British economy has grown by 0.5% in the third quarter of 2011 compared to the second quarter of 2011. The growth figure of the gross domestic product (GDP) was in line with expectations.

The results of yesterday’ meeting of European leaders in Strasbourg were perceived by the financial markets as disappointing. Germany still rejects the issue of so-called Euro-bonds. In addition, the European government leaders will from now on refrain from making demands on the European Central Bank (ECB). This should ensure the independence of the ECB. Due to the lack of adequate measures to tackle the European debt crisis most European stock markets have declined in the last six days.

The credit rating of Hungary is decreased by one notch from Baa3 to Ba1 by credit rating agency Moody's. The rating agency maintains its negative outlook for Hungary.

The 6M Euribor remained unchanged at 1.70%. The 10Y Swap decreased by 2 basis points to 2.65%.

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Thursday, November 24, 2011

The results of the issue of ten-year German government bonds were disappointing. Yesterday, Germany sold approximately EUR 3.6 billion of ten-year government bonds while the total supply was EUR 6 billion. Nevertheless, the interest rate on the bonds was on average 1.98%, which is a lower rate than the previous issue.

The U.S. consumer spending in October increased less than expected. Consumer spending in October increased only by 0.1% compared to September. Analysts had expected an increase of 0.6%. In Europe, it was announced that the volume of industrial orders in the euro area in September has declined. The index fell in September compared to August by 6.4%. Instead a decline of 2.7% was expected.

This morning the German central bank announced that the German economy has grown in the third quarter of 2011. Compared to the second quarter of 2011 the gross domestic product (GDP) increased 0.5%. This is in line with expectations.

The 6M Euribor remained unchanged at 1.70%. The 10Y Swap increased by 10 basis points to 2.67%.

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