European stuff

The euro rallied to 1.30 vs the US$ and futures bounced at about 5:30am after a German official said they are talking about the possibility of having the ESM, the permanent bailout facility, run alongside the temporary EFSF in times of emergency. This is more rhetoric than anything as we don’t know what will be of the EFSF after France lost its AAA rating and the ESM is not even up and running. With Greece, the head of the IIF said creditors have come up with their best offer and they now await a response from Germany and the IMF. European Finance Ministers get together again today to discuss all the issues they face and in addition to the above, will try to iron out the fiscal union issues that are supposed to be in place by months end. If only progress in Europe was measured by the amount of meetings all these European officials had over the past few years, we’d be well past this debt crisis. But, of course getting 17 countries to agree unanimously isn’t easy. Italian bond yields are falling for a 6th day with the 10 yr yield down to a 6 1/2 week low and the 2 yr yield is at the lowest since Sept. French business confidence in Jan fell 3 pts to the weakest since Feb ’10.

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