Monday 14 November 2011

Key Comment - 14/11/11

                                
" Reforms to political landscape in EZ allows market to relief rally. Outlook still overcast however."
Cross Market News 
  • Asia Equities are rallying on positive news from Europe, strong Japan GDP  (6% QoQ annualised)  and Chinese loan growth data: Japan: +1.2%; China: +1.9 %.
  • Italy's Lower House approved the new Budget Law on Saturday; PM Mr Berlusconi's resigned as expected. Mario Monti appointed as the new PM designate. A new government is likely to be formed by the end of the week.
  • Italian structural changes contain more reforms than previously thought but every bill needs to be double ratified (Upper & Lower Houses). 
  • Russian PM Mr Putin called for the ECB to directly intervene and avoid "a catastrophic collapse of Italy"; warns that the IMF and EFSF do not have sufficient funds to diffuse the crisis at hand.
  • Bundesbank has rebuffed calls for the ECB to become the lender of last resort for distressed sovereigns. He argues that such a step would breach Europe's ban on "monetary financing", and 'you' cannot "ensure stability of a monetary union by violating its laws".   
  • ECB's Mr Kranjec struck a slightly different tone to the 'Buba' Pdt., saying policy makers are "flexible" and will go "as far as needed" with regard to government-bond purchases.
  • According to Reuters, the German government is pushing for a limited amendment to the EU treaty, to allow greater influence over states that bust budget rules and agreed obligations on stability and consolidation. They envisage the amendments to be complete by 2012.
  • Italian 5y auction today, ECB expected to buy BTPs this morning to provide positive tone. France still in the spotlight.   
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