Discussing the longer-term solution to the Eurozone crisis
Both short- and long-term solutions to the crisis will provide focal points for the market over the next 24 hours. Today the ECB will release last week’s settled purchases (15:30CET) of bonds via the SMP (Securities Market Program), which began 8 August, with expectations centred on EUR15bn (Bloomberg survey). Tomorrow there is the meeting between French President Sarkozy and German…
Italian government approves austerity measures
On Friday the government approved austerity measures of EUR45.5bn (EUR20bn in 2012 and EUR25.5bn in 2013) with the aim of reaching a balanced budget by 2013 (Reuters). This will be one year earlier than originally planned and according to FM Tremonti, the budget deficit will now fall from 3.8% (of GDP) this year to 1.4% in 2012. The new austerity measures will have to be passed…
Divergence between CDS and cash could be meaningless
CDS basis spreads have become too high and/or the cash spread is too low for France, Belgium, Italy and Spain. Taking the example of the French 5yr CDS at 154bp, it is 106bp higher than the equivalent for the cash market (Bobl-BTAN is 48bp). This may be a function of the recent ECB intervention which has shifted some of the speculative activity from the cash markets, as investors do not…
Click here to read the full report:
http://www.easyforexnews.net/wp-content/uploads/2011/08/305959.pdf
HSBC Global Research