Market information

Tuesday, November 22, 2011

The Joint Select Committee on Deficit Reduction that would make proposals to cut the government budget in the United States did not reach an agreement. The committee consisted of Republicans and Democrats; the committee was set up after the increase of the debt ceiling this summer and the downgrade of its credit rating by S&P. This means that the United Stated government budget will automatically be cut by 1,200 billion USD as of 2013.

Credit rating agency Moody's warned France yesterday that its credit rating is at risk due to weak economic growth and increased risks to the French financial system. Moody’s warned France before in October this year, at that time the French government announced an additional round of budget cuts to maintain current AAA credit rating

The major stock exchanges on Wall Street closed negatively yesterday. The Dow Jones closed at 11547.31 (-2.11%), the S&P 500 closed at 1192.98 with a loss of 1.86%. The AEX in Amsterdam closed with a loss of 3.18% at 278.84

The 6M Euribor has remained unchanged at 1.69%. The 10Y Swap increased by 6 basis points to 2.65%.

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, November 21, 2011

The 27 states of the European Union and the European Parliament have reached an agreement Saturday on the EU budget in 2012. In the agreement is stated that EU spending is limited to EUR 129 billion. This is an increase of 2 percent from 2011. Some member states had indicated before the meeting that they would only allow an increase of spending by 2.02 percent. This is the expected inflation for 2012. The agreement is a defeat for the European Parliament. She had a target to increase the budget to EUR 133.1 billion

Reuters held a research last Friday among bond strategists of 50 major financial institutions in the U.S. and Europe. More than 48 percent of these bond strategists expect that the ECB's aversion for turning on the money press will soon change. They think that the ECB will be forced to apply quantitative easing so that further escalation of the crisis in the euro zone will be stopped.

Chief economist Keith Wade of the British investment fund Schroders reported Friday at an international conference in London that only the IMF can prevent the end of the Euro because of the European debt crisis. According to Wade, the IMF will respond positively to the European request to strengthen the emergency fund. In case the IMF will not support the emergency fund, the ECB will be forced to print extra money. This will, according to Wade, herald the end of the Euro. Wade said that Germany will never accept the ECB printing extra money and if this would occur, Germany will leave the EU.

Last Friday, the spread between Spanish and German government bonds rose to more than 5 percent. Spanish yields rose while German yields fell. At the end of the afternoon the spread was back to 4,54 percent. The Italian spread over the German yields also declined Friday in respect to Thursday. Last Thursday the spread was 5,04 percent, this Friday the spread fell back to 4.96 percent. Traders reported that the decline in spreads is due to the buying policy of the ECB.

The 6M Euribor remains unchanged at 1,69%. The 10Y swap declined by 3 basis points to 2,59%.

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Friday, November 18, 2011

Greece and holders of its debt hope to agree on a proposal to write off 50.00% of privately held debt before the end of 2011. This was announced on Thursday by the General Director of the international banks organization Institute of International Finance (IIF). This measure is expected to restore the confidence in the financial markets in Greece.

Today the 27 EU Member States and the European Parliament will meet to come to an agreement regarding the priorities and size of the EU's 2012 budget. Due to the Eurozone crisis, the EU member states state that the budget should only increase with 4.45% to 129 billion Euro. However, the Parliament expects that an increase of 5.23% to 133 billion Euro will be necessary to cover the EU expenditure.

The European Central bank (ECB) and the International Monetary Fund (IMF) are investigating ways to jointly tackle the debt crisis in the Euro zone. The ECB lending to the IMF should provide the fund with sufficient resources to support major European economies. As such, the ECB can indirectly support European countries in debt.

The 6M Euribor remained unchanged at 1.69%. The 10Y Swap increased with 11 basis points to 2.62%.

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Thursday, November 17, 2011

Yesterday, positive U.S. macroeconomic figures were published. According to Federal Reserve the industrial production in October has increased by 0.7%. This is an improvement compared to the decrease of 0.1% in September. Furthermore, the Labor Department announced that the consumer price index in October fell by 0.1% compared to the previous month. This suggests a decrease of inflationary pressure.

Nevertheless, the U.S. stock exchanges could not benefit from the relatively positive macroeconomic figures. The concerns about the European debt crisis eventually led to losses. The broad-based S&P 500 lost 1.66% and closed at 1236.91 points. The Dow Jones index closed at 11905.59 points, a loss of 1.58%.

Two important Dutch macroeconomic figures are announced this morning. First, the unemployment rate in October will be published. According to analysts the rate will remain at the same level of September, which was 5.6%. Second, the Dutch Central Bureau of Statistics (CBS) will publish the consumer confidence index during the month November. Analysts expect a slight dip in the consumer confidence index to -35. In October, consumer confidence index was -33.

The 6M Euribor remained unchanged at 1.69%. The 10Y Swap increased by 1 basis point to 2.51%.

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Wednesday, November 16, 2011

Today, the Greek parliament will probably express its confidence in the new cabinet of the Greek Prime minister Papademos. The recently sworn prime minister and former president of the Greek Central Bank has three months to save its country from bankruptcy. Also, the new economic program has to be implemented in order to change the Greek economy.

Interests on European bonds show a divergent development. Investors seem to invest mainly in German government bonds and they try to get rid of government bonds from other European countries. Next to the increase in the ten-year Italian rate (+ 28 basis points), also the Belgian (31 bps), Austrian (+22 bps) and French (26 bps) rates increased. The interest rate on two-year and five-year Dutch government bonds increased with 22 and 21 basis points respectively.

Encouraging figures on the U.S. economy yesterday provided some support to the US-stock market. The Dow Jones gained 0.14% points and the S&P 500 closed 0.48% higher. European stock markets did not do as well; the AEX lost 1.3% and the Midcap decreased 1.4%. Investors in Tokyo were more concerned about the European interest rate developments; the Nikkei closed 0.9% lower.

The 6M Euribor remained unchanged at 1.69%. The 10Y Swap increased by 6 basis points to 2.50%

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