Ok, what next for the markets? It will be the near term reaction to European budget cuts and whether bond investors are encouraged enough by them to buy sovereign new issues over the next few months to allow these countries to continue to finance themselves (and thus avoid tapping the bailout money) and whether global economic activity can overcome and continue to grow. This week, Portugal, Netherlands, Germany and Italy will all sell debt, the Shanghai index rallied sharply overnight following comments from a Chinese official that they should ease off the tightening pedal (commodity prices hanging in this morning) and we will digest a slew of US economic data that won’t yet include the fireworks of the last few weeks but will measure the state of things going into it. 3 mo US$ LIBOR rose to .51% from .497%, a fresh 10 month high and a reflection of the growing nervousness on the part of banks with other bank balance sheets.
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