A soon to be fire out rather than more tinder for spreading is how the markets are perceiving the likely soon to be bailout for Portugal. As has been the ongoing case, if the sovereign debt crisis in Europe ends with Greece, Ireland and Portugal, the economic impact will be very limited. Therefore, the market response to Spain and Italy post a Portuguese bailout is key and this morning there is a yawn with bond yields in both little changed. The Euro continues to remain elevated vs the US$ because the ECB is proving to be the anti-Fed in terms of its prudent view of price stability. The Mar Euro zone manufacturing and services composite index was down slightly and a touch below expectations but at a still high level of 57.5 and French business confidence rose to the highest since Mar ’08. Philippines joins hands with India, China, Thailand, Taiwan and South Korea in raising rates to confront inflation pressures. Rates went up 25 bps to 4.25%.
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