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With little direction of its own, the S&P futures bounce is following a rally in Europe. Europe shrugged off a slightly weaker than expected Aug PMI Services and Manufacturing index which is still at good level led by Germany and France, the two countries who have a much greater burden now to carry the economic load for the continent with southern Europe facing enormous fiscal pressures. 3 month Euro LIBOR fell to a 4 week low and European credit is relatively calm today. With the yen hovering around 15 year highs vs the US$, Japanese PM Kan and the BoJ Gov spoke over the weekend but supposedly no discussion of FX intervention took place. As I mentioned last week, the BoJ intervention experience in ’03-’04 was text book spitting in the wind after they spent 35T yen to no avail.

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