Market information

Tuesday, November 01, 2011

Last night The Greek Prime Minister Papandreou unexpectedly announced a referendum on the new EU aid package to Greece. An opinion poll published on October 29 showed that approximately 60% of Greeks think negative or probably negative about the additional support package. The European Commission is still studying for a response to the developments in Greece, the Greek opposition parties disapproved the decision of Papandreou.

The Organization for Economic Cooperation and Development (OECD) called on governments and central banks of G20 countries to take decisive measures to restore the confidence in the economy. The OECD encourages the ECB's to cut the refinancing rate to combat the European debt crisis and to take additional measures if necessary.

The stock exchanges on Wall Street closed lower yesterday after the news from Greece. The Dow Jones closed 2.26% lower at 11,955.01, the S & P 500 lost 2.47% and closed at 1253.30. In Amsterdam the AEX closed 1.76% lower yesterday at 307.5.

The 6M Euribor remained unchanged at 1.79 %. The 10Y Swap decreased by 19 basis point to 2.47%.

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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Monday, October 31, 2011

The national debt of Germany is EUR 55.5 billion lower than expected by the correction of an accounting error that was discovered in the balance sheet of the nationalized bank Hypo Real Estate (HRE). This reported the German Ministry of finance. The social democratic opposition is critical and calls the incident irresponsible. The amount of EUR 55.5 billion is about twice the general government deficit of Germany this year.

Russia could join the World Trade Organization (WTO) this year. The problems with WTO member Georgia, which prevented Russia to join the WTO are probably solved in the short term. This became clear from the discussions between the Russian president Dmitry Medvedev and his Swiss colleague Micheline Calmy-Rey. Micheline Calmy-Rey mediated between Georgia and Russia. The Russian economy makes about 2.8% of the world economy. Russia's membership to the WTO would make Russia opener and more attractive for foreign investors.

The Japanese Government has intervened Monday in the financial markets to weaken the strong Yen of Japan. The Japanese Minister of finance, Jun Azumi, reported that the Government has sold Yen’s against other currencies like the US Dollar. The amount of Yen’s that have been sold was not mentioned. Shortly before this intervention 1 USD was worth 75,32 Yen. After the intervention, the US dollar was stronger and 1 USD was worth 79 Yen.

The interest on Italian State paper has increased to a new record last Friday. The interest rate on new 10-year bonds was 6.06%. On the previous issuance of 10-year bonds, the interest was 5.86%. The Italian Government sold for EUR 7.94 billion of bonds. The Italian Government aimed to sell between EUR 5.25 billion and EUR 8.5 billion of bonds.

The 6M Euribor remains unchanged at 1.79%. The 10Y Swap declined by 8 basis points to 2.66%.

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Friday, October 28, 2011

The U.S. has indicated that they are satisfied with the outcome of the EU summit. President Obama announced that the European Union created a solid foundation for the solution of the Euro Crisis and that the U.S. is looking forward to the full development of the plan and hopes that the EU will implement this quickly. Obama also indicated that the U.S. will continue to support the EU in their efforts to solve this crisis.

Klaus Regling, head of the European emergency fund, has indicated that China does not invest in the European emergency fund. There are currently also no formal negotiations. Regling is responding to rumors that China and other emerging countries have pledged to help weak euro countries by investing in the emergency fund.

The secondary Chinese Minister of Finance, Zhu Guangyao, confirmed today that the purchases of bonds from the European emergency fund by China will not be an agenda item of the G20 summit next week. Reason for this is that the European agreement on tackling the debt crisis will stabilize the markets but not solve the underlying problems. The official organ of the Chinese Communist Party announced today that only when Europe reforms its institutions they can receive trust and help from other countries.

The French government has decreased the forecasted growth of France next year, from 1.75% to 1%. Sarkozy also announced that France is planning to realize another cut back on public spending by 6 to 8 billion next year. The French president expects that the decision on this subject will be made within 10 days.

The Euribor 6M remained unchanged at 1,79%. The 10Y Swap increased by 9 basis points to 2,74%.

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Thursday, October 27, 2011

Last night the government leaders of the Euro zone agreed in Brussels on a comprehensive package of measures to solve the European debt crisis. The main measures are as followed.

Concerning Greece, there will be a write down of Greek debt by 50% of the nominal value. This measure will reduce the Greek national debt to 120% of the GDP in 2020. The euro countries and the International Monetary Fund (IMF) will provide Greece with additional loans of EUR 100 billion. In return, additional privatizations and budget cuts are demanded of Greece.

In addition, the European emergency fund EFSF is increased to EUR 1000 billion. Among others, the ESSF will include guarantees to investors investing in bonds of so called weak euro countries. Furthermore, the EFSF will create multiple investment vehicles in which countries such as China, Russia, and Brazil may invest.

Moreover, a recapitalization of European Banks will take place. Spain and Italy have committed themselves to increase their budget cuts in order to reduce their public debt.

During the upcoming months further details of these measures will be determined. Only after the determination of the details it will be know whether these measures are sufficient and are actually being implemented. For now, the stock markets in Asia respond positively to the news.

The 6M Euribor remained unchanged at 1.79%. The 10Y Swap increased by 8 basis point to 2.65%.

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Wednesday, October 26, 2011

Analysts are of the opinion that no agreement will be reached tonight between the leaders of the euro countries. They expect that it will take several weeks before the negotiations are completed and all details are processed. Due to the fact that European leaders disagree at key points, the chance that a new bail-out fund will be formalized tonight is not very high.

The Chinese state newspaper China Daily announced that China and other emerging countries are willing to provide the funding for the European bail-out fund. They plan to provide financial support through the IMF and in return the emerging countries want more say in the IMF. According to the Chinese newspaper, this option may be included in the upcoming agreement between the European leaders in order to cope with the euro crisis.

Yesterday, concerns regarding the disagreements between Europe's leaders have influenced the confidence of investors on Wall Street. Next to that, decreasing house prices and lower consumer confidence led to a negative sentiment on the stock exchanges. The Dow Jones index lost 1.7%, the S&P500 decreased by 2% and the Nasdaq had a loss of 2.3%. The AEX index closed 1.1% lower. The Euro has remained stable at USD 1.39.

The 6M Euribor has remained the same at 1.79% and the 10Y Euro Swap has decreased by 5 basis points to 2.57%.

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