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Thursday, March 15, 2012

Yesterday, the Euro countries announced their approval for Greece’s second bailout plan. The approval concerns a disbursement of 39.4 billion Euro which is to be drawn from the emergency fund (EFSF). The second bailout plan contributes 130 billion Euro. The credit rating institute Fitch raised Greece’s credit rating to B- on Tuesday following the recent debt swap with private investors. This debt swap reduced Greek debt by 100 billion Euro.

Upon worsening signals from the British economy, Fitch has reduced the country’s credit rating from stable to negative. The country will retain its AAA status in 2012 but this is expected to be lowered within the coming two years. The underlying causes for the negative outlook stem from the country’s increased budgetary requirements and the crisis in the Euro-zone.

The AEX closed at 333.20 (+0.5%), thus reaching its highest level in seven months. The Dow Jones increased by 0.1%, closing at 13,194.10.

The 6M Euribor remained unchanged at 1.18%. The 10Y Swap increased by 6 basis points to 2.38%.

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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Wednesday, March 14, 2012

The Dutch State Treasury Agency (DSTA), part of the Ministry of Finance, raised EUR 2.825 billion yesterday by reopening the 3-year ‘DSL 0.75% 15 April 2015’. The average price on auction was 100.40, the average yield was 0.618%. This auction concluded the DSTA’s capital market financing for the first quarter of 2012. DSTA raised EUR 22.6 billion during the first quarter, this was 38% of the expected capital market financing for 2012.

The Dutch trade surplus in January 2012 was EUR 4.1 billion, according to the Netherlands Bureau of Statistics. This is EUR 1.2 billion above the trade surplus of January 2011. The value of exported goods totaled EUR 35.3 billion, a more than 10% increase compared to January 2011. Imports increased by more than 7% to EUR 31.2 billion.

The ZEW Indicator of Economic Sentiment for Germany of the German research institute ZEW confirmed the positive outlook for German business activity. In New York the Dow Jones closed with a gain of 1.68% at 13,177.68, the S&P 500 increased by 1.81% to 1,395.95. In Amsterdam the AEX closed 1.65% higher at 331.49.

The 6M Euribor decreased by 1 basis point to 1.18%. The 10Y Swap increased by 8 basis points to 2.32%.

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Tuesday, March 13, 2012

The President of the German central bank, Jens Weidmann, announced in an open letter to the Financieele Dagblad that he is deeply concerned about the financial imbalance in the euro zone. Where once banks, pension funds and other investors in Northern Europe financed the (trade) deficits of the "problem" countries we find that nowadays the ECB is taking over these financings. Weidmann is concerned about the extent to which some banks and euro area countries are dependent on ‘cheap money’ from the ECB. On the other hand, there are also many financial institutions who store their money at the ECB. Doomsayers wonder what would happen to these claims should the Euro fall apart. Weidmann sees this scenario as absurd, but insists in his letter that the extraordinary support of the ECB is temporary and limited. It is up to governments to address the structural deficits of the peripheral countries and up to the banks to recapitalize themselves, Weidmann says.

Last night the finance ministers of the euro zone announced that Spain is allowed to exceed its budgeted deficit goal. Early March the Spanish Prime Minister Rajoy announced that the budget deficit this year of 4.4% will not be realized and instead will rise to 5.8%. The euro countries asked Spain to make extra cuts of 0.5% in order to decrease the deficit to 5.3%. Next year Spain should meet the deficit ceiling of 3% like other euro countries.

Yesterday, investors where quietly waiting in anticipation of more U.S. macroeconomic figures which will be announced later this week. The AEX index remained the same and MidKapindex closed at 0.2% higher. In Tokyo, the Nikkei index rose by 0.1%. The Dow Jones index gained 0.3% and the S & P 500 remained almost unchanged and closed at 0.02% higher.

The Euribor 6M decreased by 1 basis point to 1.19%. The 10Y swap remained unchanged at 2.24%.

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Monday, March 12, 2012

China encountered a trade deficit in February of USD 31.5 billion. This is the largest trade deficit in 10 years. Exports of goods grew by 18 percent while imports of goods grew by 40 percent. Economists had expected a lower trade deficit. Premier Wen Jiabao announced last Monday that the growth of the Chinese economy this year will be expected to be 7.5 percent. For China a relative low growth.

Greece hopes for an additional contribution of EUR 1 billion from the European Investment Bank (EIB) to provide the economy an extra boost, according to a senior adviser of Prime Minister Lucas Papademos. The debt crisis and economic downturn of Greece has led to an outflow of investors. As a result of EIB’s strong credit rating, the EIB can borrow at low cost on the capital market. The EIB has provided EUR 700 million in the past two years to Greece.

In Tokyo, the stock market closed slightly lower at 9889.86 points. The larger than expected Chinese trade deficit led to a loss of 0.4 percent. The AEX opened slightly lower today, following the negative sentiment in Asia.

The Euribor 6M decreased 1 basis point to 1.20%. The 10Y swap decreased 1 basis point to 2.24%.

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Friday, March 09, 2012

Thursday evening, 85.8% of private sector creditors have decided to take part in Greece's planned EUR 206 billion debt restructuring. A statement from the Greek Finance Ministry said that participation will rise to 95.7% after collective action clauses are activated. For every EUR 100 of national value investors will receive 46.50 euro’s, consisting of EUR 15 in cash payments and EUR 31.50 in newly issued Greek bonds, according to the Financial Times. The overall Greek debt level will decline to 120.5% of GDP by 2020, a target mandated by the new EUR 130 billion bailout of the International Monetary Fund and euro countries.

The European Central Bank (ECB) reduced its expectations for economic growth in the euro-zone. The ECB forecast for this year is between -0.5% and +0.3%. Previously the ECB expected a contraction of 0.4% to a growth of 1% in the previous forecast. Inflation is expected to increase to 2.1-2.7%. Yesterday, the ECB further left the refinancing rate in the euro-zone unchanged at 1%.

The main stock exchanges rose on Greek optimism. In New York the Dow Jones closed with a gain of 0.55% at 12,907.94, the S&P500 increased by 0.98% to 1365.91. In Amsterdam the AEX closed 1.71% higher at 325.11.

The 6M Euribor decreased by 1 basis point to 1.21%. The 10Y Swap remained unchanged at 2.25%.

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