The decline in Spanish and Italian bond yields is the main catalyst for the market strength in Europe and with the S&P futures. Spain sold 3.18b euros of 12 and 18 month bills, above the target of 3b euros and while the yields were well above those sold last month, the bid to cover improved, likely enticed by the higher coupon’s. Also helping sentiment, German investor expectations for their economy, the ZEW #, rose to the best since June ’10 at 23.4, 4.4 pts above estimates. CPI in March in the euro zone rose 2.7% y/o/y, upwardly revised from the initial reading of 2.6%. It’s the 16th month in a row above the ECB target rate of 2.0%. CPI in the UK rose 3.5% y/o/y, the 27th month in a row above 3.0%. Out last week, the 2.7% US CPI y/o/y gain was the 14th month in a row above the new 2.0% Fed target rate. Price stability this is not. The RBIndia cut rates by 50 bps, 25 bps more than expected but cautioned that it may be the last one for a time as growth is still good but not great and “upside risks to inflation persist.” The Sensex index rose 1.2% in response to the cut. Foreign Direct Investment in China fell in March y/o/y for a 5th straight month by 6.1% but the decline was half what was expected.

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