Due to the US Memorial Day holiday today, US electronic trading products have now closed for the session.
In terms of newsflow from today’s European session, it has been quiet with thin volumes, although equity markets did see downward momentum following Friday’s announcement that the Spanish government will inject EUR 19bln into Bankia, a re-awaking to the fragility of the Spanish banking system. This saw Bankia’s shares tumble 27% following their auction this morning, although they did recover some losses to close down 13%. Despite Europe closing lower, equity indices in Europe did begin the session on the front-foot after opinion polls at the weekend showed growing support for the pro-bailout parties in Greece, meaning that if votes are cast as indicated a coalition could be formed of New Democracy and PASOK. Along with this, three opinion polls on the Irish referendum vote due Thursday showed a strong majority in support of the fiscal pact. The early optimism that was seen soon faded, with EUR/USD still trading around lows from the summer of 2010, although up by 20 pips from Friday’s close.
Fixed income markets, in similar sentiment, demonstrated upwards trajectory, with the Bund future closing its gap lower on the open and now trading up 10 ticks. The 10y government spreads showed widening across the core and periphery, with particular attention paid to the Spanish spread which hit a fresh EU-era wide at 507bps in early trade, although tightened off widest levels into the cash close.
No key data remains on the calendar, although European futures continue to trade until usual times. Tomorrows session looks to be significantly busier with German state CPIs attracting attention in the European session, an Italian 6-month BOT auction due, and the ECB 7-day refi. In the US session, data due includes US Redbook, US S&P/Case-Shiller Home Price Index and US Consumer Confidence.
Mon, 17:16 28-05-2012