Market information

Friday, April 27, 2012

The government parties CDA and VVD have reached an agreement in two days on spending cuts and reforms in 2013 with opposition parties D66, GroenLinks and the Christian Union. The agreement will enable the Netherlands to explain to the European Commission how the Netherlands will reduce the budget deficit to 3 percent.

The index of consumer confidence in Germany decreased last month from 5.8 to 5.6. That is the lowest level this year. Economists expected an index of 5.9. The German consumer confidence decreased for the second month in a row. Researchers attribute the decline to the sharp increases of oil prices in recent months and the ongoing economic crisis in Europe.

The French unemployment rate has increased in March to its highest level since 1999. According to the Ministry of Labour, in March there were 2.88 million French people registered as unemployed jobseekers. The French government attributes the increase to the economic crisis.

The Japanese central bank announced Friday that it further widens monetary policy and increases the size of the support program of 5 trillion yen to 70 trillion yen. The expansion of the support program is a new attempt to fight the persistent deflation in Japan.

S&P has decreased the creditworthiness of Spain last Thursday by two steps from A to BBB+. S&P warns for further decreases in the creditworthiness of Spain since Spain will have to incur more debt in the near future to support banks. S&P also expects that the budget problems of Spain will increase as the economy of Spain is expected to continue shrinking.

The 6M Euribor decreased by 1 basis point to 1.01%. The 10Y Swap decreased by 2 basis points to 2.23%.

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, April 26, 2012

Yesterday, the U.S. Federal Reserve (Fed) decided to keep its key interest rate unchanged. The Federal Funds rate remains between 0.00%-0.25%. Furthermore, the Fed repeated the statement that the Federal Funds rate most probably will be kept low until the end 0f 2014.

The political crisis in the Netherlands puts more pressure on its AAA credit rating. When next year the budget deficit in will be higher than the 3% level the pressure on the credit rating will significantly increase, according to credit rating agency Fitch. Nevertheless other elements will also be taken in account.

Germany is still expecting its economy to grow in the coming years. According to the German Ministry of Economic Affairs the economic growth will reach 0.7% this year and 1.6% in 2013. It is emphasized that this is a conservative estimate. The European debt crisis is still a major risk for the German economy.

The 6M Euribor remained unchanged at 1.02%. The 10Y Swap remained unchanged at 2.25%.

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Wednesday, April 25, 2012

The Dutch State Treasury Agency, part of the Ministry of Finance, raised a total of EUR 1.995 billion yesterday by reopening two bonds. A bond maturing in 2 years raised EUR 1.0 billion, the average yield was 0.523%. A bond maturing in 25 years, raised EUR 995 million. The average yield for this bond was 2.782%. Yesterday at 13:00 the spread between a Dutch and a German 10-year government bond was 66 basis points, this spread had risen on Monday to almost 80 basis points.

The European bail-out fund, EFSF, raised EUR 3 billion yesterday in a 7-year bond. The bond has a coupon of 2.625% and matures on May 2nd 2019. The issue price was 99.817 and the resulting yield was 2.654%. The spread between a comparable German government bond was 159.6 basis points. The funds raised will be used to support the financial assistance programmes for Ireland, Portugal and Greece.

In New York the Dow Jones closed with a gain of 058% at 13,001.56, the S&P 500 increased by 0.37% to 1,371.97. In Amsterdam the AEX closed 1.1% higher at 304.68.

The 6M Euribor decreased by 1 basis point to 1.02%. The 10Y Swap increased by 4 basis points to 2.25%.

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Tuesday, April 24, 2012

Yesterday the central bank of Spain announced that Spanish economy has contracted by 0.4% in the first quarter of 2012 compared to the last quarter of 2011. This adds to the contraction of 0.3% in the last quarter of 2011, which means that the Spanish economy is now in a new recession. The European statistics agency Eurostat confirmed the budget deficit of 8.5% of the Spanish government in 2011. Spain will have to reduce the budget deficit to 3% by 2013.

Producer confidence in the Netherlands declined in April 2012 compared to March this year, according to Statistics Netherlands (CBS). The balance of positive / negative responses was -3.3% in April 2012, in March 2012 the balance was -2.6%. Producers were slightly more negative about their order position and future production.

Political uncertainty in France and the Netherlands and a new recession in Spain dampened the spirits on the stock exchanges. The AEX in Amsterdam dropped by 2.65% to 301.27. On Wall Street the Dow Jones declined by 0.78% to 12,927.17 and the S&P 500 declined by 0.84% to 1,366.94.

The 6M Euribor remained unchanged at 1.03%. The 10Y Swap decreased by 2 basis points to 2.21%.

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Monday, April 23, 2012

According to economists, financial markets are likely going to punish the failure of the Dutch political negotiations. It is likely that the interest rate spread between Germany and the Netherlands will further increase, which will result in higher funding costs for the Netherlands. As a result of this failure it is also possible that the Netherlands will lose its AAA status in the near future now it becomes more likely that the Dutch government will fail to reduce the budget deficit below the European limit of 3%.

For the sixth consecutive month the Chinese industrial growth declined. This is evident from figures published Monday by the bank HSBC. The HSBC purchasing manager index came in at 49.1. In March, the index reported an index of 48.3. An index of 50 or more points indicates growth, an index below 50 a decline. According to HSBC, the decline of the industrial growth is due to declining exports.

According to the IMF's chief economist, Olivier Blanchard, Germany will have to accept the issuance of Eurobonds as all EURO-countries have agreed upon budgetary discipline and instruments to maintain these agreements. The purpose of Eurobonds is to decrease the interest spread between EURO-countries.

The 6M Euribor decreased by 1 basis points to 1.03%. The 10Y Swap increased by 3 basis points to 2.23%.

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