European stocks bounce back from intial sale

European stocks responded to the Merkel/Sarkozy get together with an immediate sale but have since mostly crawled its way back and the euro is trading at a 3 week high vs the US$. The financial transaction tax is of course causing a lot of head scratching (it’s downright idiotic) just as many parts of the region are capital starved and European bank balance sheets are stretched. German CDS is falling to a 1 1/2 week low and 10 yr bund yields are lower as the prospect for a eurobond, which would dilute the financial strength of Germany, was put off for now. French CDS is also narrower. The 10 yr UK gilt yield is falling to a new low after Jobless Claims there had the biggest increase since May ’09. In Asia, the Chinese yuan backed off a touch from its record high. In the US, the MBA said that purchase apps are still showing no benefit from the continued drop in mortgage rates as they fell 9.1% to the lowest since July ’10 but refi’s bounced again by 8% to the most since Nov. From a contrarian standpoint, the weekly Investors Intelligence sentiment figures were not encouraging for those thinking we’ve bottomed. Bulls were down just 1.1 pts to 46.2 while Bears were unchanged at 23.7.

Print Friendly, PDF & Email

Posted Under