All is not economically lost if you are in Asia (Malaysia raised rates) or have big exposure to it. Australia’s June jobs report was impressive. They added 45.9k jobs, well above forecasts of 15k and if adjusted for population size to equate with the US, Australia created 647k jobs. European stocks are bouncing again led by banks as the criteria that are being used for the stress tests are analyzed. Spain’s 5 yr CDS in particular is down 13 bps at 232 bps, a 2 1/2 week low and down from the recent high of 270 bps. While some have issue with the extent (not enough) of the stressed scenarios placed on it, we are one step closer to further clarity and recapitalizations for those that need it. With this said, Euribor rates continue higher as the reduced bank borrowing from the ECB relative to the amount maturing is a de facto tightening as there is a reduction in the amount of liquidity outstanding. Both the BoE and ECB left rates unch as expected.
