" Continued bond buying of Spain and Italy gives market brief respite. Expect selling late in the day and into next week."
Cross Market News
- Asia-Pacific Equities are in the red across the board: Japan: -1.2%; China: -2.0%; Hong Kong: -1.8%; Korea: -2.0%; India: -1.6%; Australia: -1.9%
- Asian investors and central banks have begun to sell German bonds and pull out of the Eurozone altogether for the first time since the debt crisis began, deeming EU leaders incapable of agreeing on any coherent policy. The Telegraph quotes Andrew Roberts as saying: "The question on everybody's mind is whether it is time to get out of Germany... though we are not there yet." Jean-Claude Juncker, Eurogroup chief, fuelled the fire by warning that Germany is no longer a sound credit with debt of 82% of GDP. "I think the level of German debt is worrying. Germany has higher debts than Spain,"
- Eurozone and IMF officials have reportedly discussed the idea of the ECB lending to the IMF, to provide the fund with sufficient resources for bailing out even the biggest euro zone sovereigns. This is being seen as "[...] one way of getting around the legal restrictions on the ECB"
- A report by Stone & McCarthy (Princeton) shows that overnight deposits at the European Central Bank have been rising since the beginning of June as the debt crisis in Europe continues to intensify. The report cites the rising credit risk profile in interbank markets on fears that counterparties could be exposed to distressed sovereign debt, and this may be forcing banks to reduce risk and accept a lower rate of return on their funds.
- Bank of England's Mr Weale says it is "perfectly possible" that the UK economy is already contracting, and if "things evolve as forecasts suggest", there would be a "very strong case" for adding more stimulus to the economy.
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