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06.22.11 Economics Wednesday BRIEF Europe News Analysis & Commentary
ECONOMIC CALENDAR Papandreou Wins Vote, Euro Falls, Fed Decision (London TIME) ■■WHAT TO WATCH: The euro weakened against the dollar on concern Greek Prime Minister George Papandreou will EUROPEAN daybook: COUNTRY TIME EVENT SURVEY PRIOR fail to pass austerity measures even after winning last night’s Louisa Fahy confidence vote. European Commission President Jose FR 07:45 own-Company Prod. Outlook - 11 Barroso said the result ``removes an element of uncertainty FR 07:45 Production Outlook Indicator - 15 from an already very difficult situation.’’ The IMF said Spain must step up efforts to reform its economy. The Bank of England publishes the min- FR 07:45 Business Conf. Indicator 106 107 utes of its last meeting. U.S. Federal Reserve decisions on rates, bond purchases. DE 08:00 Consumer Conf. Indicator -0.5 2.6 ■■ ECONOMICS: Euro-Zone Industrial New Orders (MoM) April; est. 1 percent, 10 SP 08:00 mortgages-capital loaned YoY - -0.343 a.m. Euro Zone Consumer Confidence June; est. -10.4 (prior -9.8), 3 p.m. BOE minutes 9.30 a.m. Bank of Portugal monthly statistical report, 11 a.m. Trichet, King SP 08:00 mortgages on Houses YoY - -0.202 speak at ESRB press conference, 5.30 p.m..
SW 08:00 Consumer Confidence 17 17.9 ■■ GOVERNMENT: Italy’s Berlusconi speaks in parliament on government’s reshuf- fle, 10 a.m. Merkel briefs Bundestag Europe Committee on EU summit, 10.30 a.m. SW 08:00 manufacturing Confidence SA 9 11 ■■ COMPANIES: European Securities and Markets Authority will recommend SW 08:00 Economic Tendency Survey 110.5 112.4 releasing bank stress-test results when markets are closed.
NE 08:30 Consumer Confidence SA -12 -10 ■■ Markets: China’s money-market rate climbed to the highest level in more than three years. South Korea’s won advanced to a six-week high. Treasury yields were SW 08:30 Unemployment Rate 0.077 0.079 within two basis points of a one-week high. The cost of protecting U.S. corporate NO 09:00 Unemployment rate(AKU) 0.033 0.033 bonds from default fell by the most in three months.
PD 09:00 retail Sales MoM -0.013 0.023 Spain at Risk of Contagion From Greece as Regional Debt Rises PD 09:00 retail Sales YoY 0.131 0.186
PD 09:00 Unemployment Rate 0.121 0.126 3.0 SA 09:00 CPI (all items) MoM 0.003 0.003 Spain-German 10 Yr Sovereign SA 09:00 CPI (all items) YoY 0.044 0.042 2.5 Spread SI 09:00 Auto. COE Open Bid Cat A - 53390 2.0 TA 09:00 Unemployment Rate SA 0.043 0.0435
UK 09:30 Bank of England Minutes - - 1.5
EC 10:00 ind. New Orders NSA YoY 0.14 0.141 1.0 EC 10:00 ind. New Orders SA MoM 0.01 -0.018
SZ 10:00 Credit Suisse ZEW Svy. (Exp.) - -11.5 0.5
IR 11:00 Property Prices MoM - -0.01 0.0 Saul Doctor, research analyst at JPmorgan Source: Bloomberg Chase, talks with Tom Keene about Spain risks debt contagion as its regions struggle to contain borrowing. The spread between its European credit default 10-year sovereign bonds and German bunds rose to the highest since November. Demand for six-month Spanish bills fell a week after data showed the total debt of Spain’s 17 regions rose to a swaps in the light of the record 11.4 percent of GDP in the first quarter from 10.8 percent in the previous quarter. debt crisis.
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BIG PICTURE COMMENTARY BY david powell, bloomberg economist
Labor Markets Point to Sharp Divergence in ECB, Fed Interest-Rate Outlooks
When Federal Reserve Chairman Ben Bernanke gives his second press Taylor Rule Suggests Euro Area Requires Two More Rate Increases conference this afternoon, his tone will 7 probably differ considerably from the 6 hawkish outlook delivered by Euro- 5 pean Central Bank President Jean- 4 Claude Trichet almost two weeks ago. The divergence may be largely 3 explained by the structure of the labor 2 markets in the two monetary jurisdic- 1 tions. The relevance of that difference Federal Funds Rate (%) 0 may decline in the future. Federal Funds Rate Prescribed by Taylor Rule (%) Taylor Rule models for the euro -1 ECB Refi Rate Rate Prescribed by Taylor Rule (%) area and the U.S. suggest the latter -2 needs about 225 basis points of ECB Refi Rate (%) -3 monetary stimulus more than the former. The difference is largely Jan-00 Mar-01 May-02 Jul-03 Sep-04 Nov-05 Jan-07 Mar-08 May-09 Jul-10 explained by the level of unemploy- Source: Bloomberg; San Francisco Federal Reserve Bank ment in the U.S. and Europe below which prices tend to rise — the non-accelerating inflation rate of Labor Market in Euro Area Has Less Slack Than in U.S. unemployment, or NAIRU. 6 The Organization for Economic 5 Cooperation and Development esti- Difference Between Unemployment Rate mates that rate to be 8.5 percent for 4 and NAIRU (U.S., %) the euro area and 5.4 percent for the U.S. The gap between those levels 3 Difference Between Unemployment Rate and the current rates of unemploy- 2 and NAIRU (Euro Area, %) ment, measures of spare capacity in those economies, stands at 1.4 per- 1 centage points for the euro area and 0 3.7 percentage points for the U.S. As a result, the ECB has less abil- -1 ity to stimulate the economy through -2 low interest rates than the Fed, even Jan-00 Mar-01 May-02 Jul-03 Sep-04 Nov-05 Jan-07 Mar-08 May-09 Jul-10 though unemployment in Europe at 9.9 percent is higher than in the U.S. Source: Bloomberg at 9.1 percent and core inflation at 1.5 percent is exactly the same in both monetary areas. This exercise words, signaled that the Govern- tors until the summer of 2012, about uses core inflation for both econo- ing Council will raise rates by 25 the same time that they expect a mies in line with the inputs used in a basis points in July. That suggests rise of the Federal Funds rate. recent study by Fernanda Nechio of the ECB will likely raise its main While a drop in the unemployment the San Francisco Federal Reserve. refinancing rate only once more this rates and/or a rise in the levels of The Taylor Rule suggests that the year, possibly in October, at Trichet’s core inflation in either the euro area U.S. central bank, unable to actu- last meeting before retirement. or the U.S., would signal that inter- ally lower its main policy rate to the Investors have largely priced in in- est rates need to be increased, a minus 0.5 percent level prescribed, terest-rate expectations for the next rise in the Fed’s forecast of the long- should leave borrowing costs un- nine to 12 months that are in line run rate of unemployment, another changed for the foreseeable future. with the signals being sent by the way of saying NAIRU, would signal The rule indicates that the ECB Taylor Rule. The interest-rate market the same thing. The longer the un- should raise its financing costs a fur- has priced in a pause from the ECB employment rate in the U.S. remains ther 50 basis points to 1.75 percent. after a third-quarter increase. The stubbornly high, the more likely that Trichet, using thinly veiled code next move isn’t expected by inves- outcome appears.
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FED WATCH COMMENTARY BY JOSEPH BRUSUELAS, bloomberg Economist
Fed May Explore Different Measures to Support Economic Growth
Investors will be watching the FOMC statement and Federal 3.00 Fed Balance Sheet Reserve Chairman Ben Bernanke’s Fed Agency Debt Mortgage-Backed Securities Purchases Liquidity to Key Credit Markets post-statement press conference 2.50 Lending to Financial Institutions Long Term Treasury Purchases today for indications of what, if any, Traditional Security Holdings extra support the central bank is 2.00 prepared to offer the slowing U.S. economy as its second round of quantitative easing draws to a close. 1.50 Trillions A third round of asset purchases doesn’t appear to be in the cards. 1.00 Bernanke has gone out of his way to state that the hurdle to more Fed 0.50 purchases would be quite high. This doesn’t mean the central bank 0.00 is out of ammunition, even with the Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 federal funds rate essentially at zero. Source: Cleveland Fed, Bloomberg In fact, it has a number of options, most of which relate to its ability to Commercial, Industrial Lending Accelerates indirectly influence the direction of 60 interest rates, inflation expectations
and economic activity. 30 Under normal conditions, the Fed influences the economy by chang- ing the overnight rate. Under current 0 conditions, it attempts instead to alter the level of long-term rates. -30 The FOMC can commit to keeping its extremely accommodative policy for a specific period of time based -60 Net % of Domestic Respondents Reporting Strong Demand for C&I on the evolution of economic condi- Loans: Large/Medium Size Firms Net % of Domestic Respondents Reporting Strong Demand for C&I tions. The Bank of Canada did that Loans: Small Firms from April 2009 to April 2010 when it -90 Mar-95 Mar-97 Mar-99 Mar-01 Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 kept its policy rate at 0.25 percent. Source: Bloomberg The Fed has implicitly taken this action over the past 18 meetings, lending even at the current low rates zero return. maintaining the phrase “extended by eliminating the return on excess Which of these options the Fed period of time” in its statement reserves banks get from the Fed. might implement depends on the for more than two years. Making Should these measures not result duration of the slowdown and its that commitment more explicit by in jobs and faster growth, or should causes. A slowdown that appears specifying a date before which the the prospect of deflation return, the persistent and tied to ongoing weak- Fed won’t raise rates would signal Fed may cap yields. While capping ness in consumption and housing to investors that policy will remain rates would likely strengthen ag- would be more likely to spur action accommodative even as growth and gregate demand, stimulate spend- than would a shorter slowdown. employment modestly rebound. ing and reduce the risk of deflation, The former would likely spur the Along those same lines, the com- removing the price signal that yields Fed to delay an exit indefinitely or mittee may choose to maintain its provide would alter incentives to adopt an inflation target prior to at- balance sheet at or near current save and invest, resulting in the inef- tempting more quantitative easing. levels for a specific period of time to ficient allocation of capital. The unorthodox measures of cap- support lower long- and short-term Policy makers might also impose a ping yields and imposing a penalty yields and facilitate growth. penalty on excess reserves, essen- on excess reserves are outliers that Another option is to cut interest tially taxing banks that park money would likely be used after all other paid on reserves to zero from 25 at the Fed if they show no willing- measures, including another round basis points. That would spur bank ness to lend even when faced with a of asset purchases, have failed.
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What the Fed is watching
The Federal Reserve’s decision on whether or not to provide more support to the U.S. economy will likely depend on its opinion of how lasting and severe the current slowdown is. It will make that determination based largely on what the indica- tors below show in regards to where inflation, manufacturing and spending are headed.
Monetary Policy Rules 8
6
4
2
0
-2 Fed Funds Rate Taylor Rule Estimate: NAIRU at 5.2 Taylor Rule Estimate: NAIRU at 6.5 -4 Jun-01 Jun-03 Jun-05 Jun-07 Jun-09 Jun-11
Projected Path of Short and Long Term Rates Global Manufacturing Conditions 5.5 5.5 65 3-Month, 2-Year Forward (LHS)
US 10-Year (RHS) 5 60 4.5
4.5 55
3.5 4 50
3.5 45 2.5
3 40
1.5 JP Morgan Global PMI 2.5 35 China PMI Manufacturing US ISM Manufacturing 0.5 2 30 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 May-05 May-06 May-07 May-08 May-09 May-10 May-11
What's Driving Core CPI Economic Slack Still Evident 5.0 2 -5
4.0 1 -3
3.0 -1 0
2.0 1 -1 1.0 3 -2 0.0
Owners Equivalent Rent Shelter Core PCE (LHS,Y/Y%-Y/Y% One Year Previous) 5 Rent of Primary Residence Core CPI Unemployment Gap (RHS, Unemployemnt Rate-NAIRU) -1.0 -3 May-01 May-03 May-05 May-07 May-09 May-11 Mar-81 Mar-86 Mar-91 Mar-96 Mar-01 Mar-06 Mar-11
Real Spending Exceeds Income Downward Pressure on Wages Evident 8 3.5 5
4.5 6 4
5.5 4 3 6.5 2 7.5 2 0 8.5
1 -2 Real Income (Y/Y %) 9.5 Unemployment Rate (LHS, Inverted) Real Spending(Y/Y%) Average Hourly Earnings (RHS, Y/Y% Change Lagged 3 Months) -4 10.5 0 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 May-91 May-96 May-01 May-06 May-11
Source:Bloomberg
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DATA WATCH niraj shah, Bloomberg Economist
ZEW Survey’s Larger-Than-Forecast Decline Signals German Slowdown
The outlook for the German economy fell to the lowest level in two and a half years according to the ZEW survey for June with German ZEW Survey Shows Sentiment has Peaked concern about contagion from the Greek crisis likely having con- 100 150 80 tributed to a bigger decline than economists had forecast. 100 Investors’ outlook for the economy in six months fell into nega- 60 40 tive territory for the first time this year, with the index dropping by 50 12.1 points to minus 9, below the 10-year average. The fourth 20 decline in a row points to a slowdown in the second half of 2011. 0 0 The current assessment component fell for the first time since -20 -50 May 2009 as slowing global demand and expectations of an ECB -40 -60 rate increase weighed on sentiment. Still, at 87.6, the index has Economic Sentiment -100 -80 been higher only four times in almost 20 years, suggesting the Current Situation economy may grow robustly in the second quarter. A large order -100 -150 backlog is likely to insulate Germany from many of the global Bloomberg headwinds. Source:
U.K. Government Borrowing at Start of Fiscal 2012 Was Highest on Record
The U.K. budget deficit in May was narrower than a year earlier % U.K. Net Debt as Percentage of GDP at 17.4 billion pounds, though net borrowing for the first two 160 months of the financial year was the highest on record at 27.4 billion pounds. 140
Excluding bailouts for banks, public sector net debt was 920.9 120 billion pounds, equivalent to 60.6 per cent of GDP, at the end of May. When financial interventions are included, that amount rises 100
to 2299.8 billion pounds, equivalent to 151.4 per cent of GDP. 80
Public sector net borrowing has fallen from a peak of about 157 Net Debt Including Financial 60 Interventions billion pounds in early 2010 to 145 billion on a rolling 12-month Net Debt basis. Central government tax receipts were up 2.9 billion pounds 40 from a year earlier, with as much as 1.3 billion being accounted for by January’s value-added tax increase. Government spending 20 rose1.1 billion on the year, with social benefits up about 700 mil- Source: Bloomberg lion pounds and debt interest payments rising 350 million pounds.
Industrial Trends Survey Paints Brighter Picture for British Manufacturing
The U.K. manufacturing outlook appears rosier after the Confed- CBI Industrial Trends Survey eration of British Industry’s June Industrial Trends survey showed 20 40 total orders turning positive for only the third time in three years. Total orders rose to 1 from minus 2, compared with a 20-year 10 30 0 average of minus 20, while export orders gained to 0 from minus 20 -10 3. The figures show a rebound after the May manufacturing PMI 10 fell to a 20-month low. The stock index fell to 3 from 9, indicating -20 0 some of the increase in demand may be prompted by companies -30 running down stock levels as opposed to new production. -10 -40 Selling prices rose to 27 from 24 in May, above the 20-year -20 -50 average of 3. This suggests some manufacturers are passing on Total Orders -60 -30 costs even as many input prices such as oil have stabilized. Selling Prices After supply chain issues from Japan and a string of public holi- -70 -40 days in April and May, the recent weak manufacturing figures may prove an unreliable guide to second-half economic performance. Source: Bloomberg
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EUROPE TODAY BLOOMBERG NEWS
Papandreou Wins Greek Confidence Vote Political Watch Greek Prime Minister George Papandreou won a vote of confidence, bolstering his new government’s chances of pushing through austerity U.S. Debt-Talk Splits measures to secure further international financial aid for the country. Negotiators seeking a bipar- A total of 155 lawmakers supported the motion in the 300-seat parliament tisan U.S. debt-reduction plan in Athens early this morning, with 143 voting against. Papandreou reshuf- said they oppose pairing it with fled his Cabinet and sought the approval of the chamber after fending off a only a short-term boost in the revolt within his socialist Pasok party last week. After the vote, police used U.S. debt limit, even as they re- tear gas to disperse thousands of citizens protesting planned budget cuts. main far apart over tax increas- — By Maria Petrakis and Marcus Bensasson es rejected by Republicans. “I don’t see how multiple votes on a debt ceiling increase can help get us to where we want Germany’s Feld Urges 50% Greek Debt Cut to go,” House Majority Leader Eric Cantor said. “I am not so Greek debt must be restructured as soon as possible and should include sure that if we can’t make the a reduction by about half, Lars Feld, a member of the German govern- tough decisions now, why we ment’s council of economic advisers, said, Rheinische Post reported. would be making those tough The EU must first stabilize banks to prepare them for a possible Greek decisions later,” said Cantor. default, the newspaper cited Feld as saying in a preview of an article. The restructuring should take place in the first half of 2012 at the latest, he said. — By Karin Matussek Thai Vote Tension Thailand’s economic re- silience may be tested next month as polls indicate a win Norway May Scale Back Interest-Rate Increases for the party removed from power twice in the past five Norway’s central bank may scale back plans to raise interest rates over years. Pheu Thai, backed by the next year as Europe’s debt crisis and rising unemployment in the U.S. exiled former Prime Minis- threaten to sap a rebound in global economic growth. ter Thaksin Shinawatra, led Norges Bank will leave its overnight deposit rate unchanged at 2.25 the ruling Democrats by 13 percent, after last month raising it for the first time in a year, according to all percentage points in a poll 22 economists surveyed by Bloomberg. The bank is due to present its deci- released June 18. The army, sion along with forecasts for the economy and rates at 2 p.m. today in Oslo. which deposed Thaksin in — By Josiane Kremer 2006, has warned voters to avoid picking the “same thing” as previous times; disputes over the last election led to IMF Sees Considerable Risks in Spain arson attacks and protests that killed more than 100 people. The International Monetary Fund said Spain must step up efforts to re- form its economy as the sovereign debt crisis threatens to damp growth. Japan’s Long Session “The repair of the economy is incomplete and risks are considerable,” the Washington-based IMF said in its annual appraisal of Spain. Japan’s ruling party decided — By Emma Ross-Thomas to extend parliament’s ses- sion until the end of August, enabling Prime Minister Naoto Kan to try and achieve his leg- islative goals before fulfilling a Economist Kay Asked to Review Equity Market pledge to step down. Azuma U.K. Business Secretary Vince Cable asked the economist John Kay to Koshiishi, head of the ruling review how the equity market functions and suggest ways to give long-term Democratic Party of Japan’s incentives to companies and strengthen shareholder involvement. upper house caucus, told his Kay, a visiting professor at the London School of Economics, helped colleagues today that the Diet popularize the phrase “casino banking” after the financial crisis. will be extended 70 days. — By Robert Hutton
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U.S. FOCUS BLOOMBERG NEWS
U.S. Worse Than When Obama Inaugurated Two years after the official start of the recovery, Americans remain pessimis- ASIA OVERNIGHT tic about their current economic circumstances and longer-term prospects. Asian Exports Slowing Fewer than a quarter of people see signs of improvement in the economy Europe’s debt crisis and slow- and two-thirds believe the country is on the wrong track, according to a ing U.S. growth are damping Bloomberg National Poll conducted June 17-20. demand for exports from Asia, By a 44 percent to 34 percent margin, Americans say they believe they are giving central banks a reason worse off than when Barack Obama took office in early 2009, when the U.S. to slow interest-rate increases. was in the depths of a recession compounded by the September 2008 finan- South Korean, Indian and Thai cial crisis and the economy was losing as many as 820,000 jobs a month. export growth has slowed, — By Mike Dorning while Chinese overseas ship- ments may stagnate this sum- mer, Credit Suisse said. Policy makers may be forced to delay Obama Gets 30% Certain to Support Re-Election raising borrowing costs to sup- port their economies, slow cur- Americans are growing more dissatisfied with Barack Obama’s handling rency gains and protect region- of the economy and say it will be hard to vote to re-elect him without see- al exports, which accounted for ing significant progress over the next year and a half. 35 percent of world shipments By a margin of 61 percent to 37 percent, the Bloomberg National Poll in 2009. That could spur infla- shows Americans say they believe Obama will have had his chance to tion, which has accelerated to make the economy “substantially better” by the end of 2012. the fastest pace since 2008 Only 30 percent of respondents said they are certain to vote for the presi- in China, approached 20 per- dent and 36 percent said they definitely won’t. Among likely independent cent in Vietnam last month and voters, only 23 percent said they will back his re-election, while 36 percent prompted protests in India. said they definitely will look for another candidate. — By Julianna Goldman China Inflation Pick-Up China’s inflation in June will be fasterer than in May, the National Development and Raising Revenue Now Could Hurt Overhaul Reform Commission said in a The chief Republican tax writers in Congress are warning that Demo- statement on its website today. cratic attempts to raise revenue as part of a deficit reduction package could Inflation will accelerate at a threaten a comprehensive tax code overhaul. faster pace this month because Representative Chris Van Hollen, a Democrat who is participating in the lagging effect of prices will bipartisan deficit reduction talks, reiterated his party’s goal yesterday of be greatest this year in June, raising revenue by eliminating some deductions in the tax code. Senator the commission said.. Orrin Hatch, the top Republican on the Finance Committee, said such ef- forts would be a “mistake” that could blunt the momentum behind a broader Australia Index Slows rewrite of the U.S. tax code. An Australian index of lead- — By Steven Sloan ing economic indicators rose at a slower pace in April as the impact of natural disasters this year hampered growth. The Overseas Companies Seek U.S. Tax Rewrite index, a gauge of future eco- nomic growth, rose 0.2 percent Companies based outside the U.S. are lobbying Congress on an overhaul from a month earlier, when it of the tax code with a different set of priorities than their U.S. counterparts. climbed a revised 0.6 percent, Overseas companies tend to care little about issues such as U.S. multina- Westpac Banking and the Mel- tionals’ overseas profits. Their aim is preventing tougher rules against earn- bourne Institute said in a report ings stripping, which they say discriminates against non-U.S. companies. released in Sydney today. — By Richard Rubin
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TRENDS
Century of Hunger Is Warning From France as G-20 Ministers Meet
World leaders risk making this “the century of hunger” unless they can Global Hunger Declining agree to new rules on food supply, French Agriculture Minister Bruno 19 37 Le Maire said before a meeting of 53 Developed Countries Group of 20 farm ministers in Paris. France, which holds the G-20 Near East and North Africa presidency, wants a central da- tabase on crops, limits on export Latin America and the bans, international market regula- 239 Caribbean tion, emergency stockpiles and a Sub-Saharan Africa 578 plan to raise global output. Wheat as much as doubled in the Asia and the Pacific past year as Russia and Ukraine curbed exports after droughts. That added to record global food Millions of people (as of 2010) prices the World Bank says drove Source: FAO 44 million more people into poverty since June. Nations will spend $1.29 riots occurred worldwide, according There will be shortages in corn, trillion on food imports this year, the to the U.S. State Department. wheat, soybeans, coffee and cocoa most ever and 21 percent more than Corn futures rose 82 percent in the this year or next, Rabobank says. in 2010, the UN estimates. past 12 months in Chicago trading, — By Rudy Ruitenberg and The last time prices surged, from a global benchmark, rice gained 39 Francine Lacqua 2007 to 2009, more than 60 food percent and sugar rose 65 percent.
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06.22.11 ECONOMICS | European Edition 9
MSCI EQUITY INDICES 10 YEAR GOVERNMENT BOND YIELDS 1D YoY 30D FORWARD LAST 1D CHG YoY 30D 5Y TICKER COUNTRY LAST PRICE TICKER COUNTRY %Chg %Chg Chart PE 12M YIELD BPS BPS Chart CDS Europe Europe Euro Area Euro Area MXAT Index Austria 137.6 2.1% 14.4% 9.0 GAGB10YR Index Austria 3.50% 2.6 30.8 65.2 MXBE Index Belgium 51.1 1.0% -1.5% 12.5 GBGB10YR Index Belgium 4.14% -0.1 70.0 145.5 MXEST Index Estonia 716.7 -0.4% 9.6% Estonia 87.5 MXFI Index Finland 81.3 1.9% -6.5% 11.7 GFIN10YR Index Finland 3.31% 0.5 34.1 32.2 MXFR index France 107.1 2.0% 5.9% 10.3 GDBR10 Index France 2.98% 1.4 21.3 79.7 MXDE Index Germany 105.2 1.9% 12.9% 10.3 GDBR10 Index Germany 2.98% 1.4 21.3 40.2 MXGR Index Greece 30.7 4.7% -23.5% 7.6 GGGB10YR Index Greece 16.97% -36.9 748.6 1932.8 MXIE Index Ireland 23.0 2.4% -12.0% 22.2 GIGB10YR Index Ireland 11.40% -5.8 593.7 731.0 MXIT Index Italy 59.2 2.1% -1.0% 9.4 GBTPGR10 Index Italy 4.81% -3.9 83.3 171.0 MXNL Index Netherlands 76.3 1.2% -3.8% 9.4 GNTH10YR Index Netherlands 3.30% 0.1 32.4 33.8 MXPT Index Portugal 64.9 1.4% -0.3% 11.8 GSPT10YR Index Portugal 11.13% -2.4 550.3 751.7 SKSM Index Slovakia 221.2 0.0% 4.0% GRSK10Y Index Slovakia 4.29% 1.5 30.2 90.5 MXES Index Spain 112.4 1.9% -0.7% 9.3 GSPG10YR Index Spain 5.49% -9.8 102.6 263.8 Non-Euro EU Non-Euro EU MXBU Index Bulgaria 231.6 1.3% 14.1% Bulgaria MXCZ Index Czech Republic 366.4 1.4% 0.9% 11.7 CZGB10YR Index Czech Republic 3.91% 2.9 -37.2 82.3 MXDK Index Denmark 3763.5 1.6% 0.6% 14.5 GDGB10YR Index Denmark 3.17% 1.3 32.6 33.7 MXHU Index Hungary 1272.8 -0.1% 2.6% 9.5 GHGB10YR Index Hungary 7.25% -4.0 -31.0 278.0 RIGSE Index Latvia 429.3 -0.5% 18.6% Latvia 210.0 VILSE Index Lithuania 396.9 0.4% 26.8% Lithuania 207.6 MXPL Index Poland 1969.0 0.3% 20.8% 11.2 POGB10YR Index Poland 5.85% -5.6 -3.5 155.3 MXRO Index Romania 585.9 0.4% 12.6% Romania 261.0 MXSE Index Sweden 8467.3 2.4% 3.6% 12.7 GSGB10YR Index Sweden 2.87% 1.3 12.5 25.2 MXGB Index U.K. 1711.1 1.5% 10.1% 10.7 GUKG10 Index U.K. 3.22% -0.1 -29.2 63.3 Non EU Non EU ICEXI Index Iceland 615.8 1.0% 10.4% MXNO Index Norway 2257.6 2.8% 10.6% GNOR10YR Index Norway 3.45% 1.7 -23.8 18.8 MXRU Index Russia 987.2 1.4% 29.5% MICXRU10 Index Russia 8.28% 1.1 66.4 144.2 MXCH Index Switzerland 805.8 1.0% -4.5% 12.3 GSWISS10 Index Switzerland 1.69% 1.2 6.6 MXTR Index Turkey 869294.9 1.7% 4.2% 9.6 TGBY10T0 Index Turkey 9.26% -7.0 -27.0 171.7
M arket I ndicators MXUK Index Ukraine 551.2 0.5% 15.1% Ukraine 449.5 Americas Americas MXUS Index U.S. 1238.2 1.4% 18.8% 12.9 USGG10YR Index U.S. 2.98% -0.2 -18.5 51.7 MXBR Index Brazil 3501.6 1.0% 6.0% 9.8 GEBR10Y Index Brazil 12.42% 8.1 6.5 114.7 MXMX Index Mexico 6139.9 1.2% 14.5% 13.4 GMXN10YR Index Mexico 6.95% -6.7 -6.6 111.7 Middle East & Africa Middle East & Africa MXAE Index United Arab Emirates 216.6 -0.2% 6.3% MXZA Index South Africa 791.6 1.0% 9.5% 11.3 GSAB10YR Index South Africa 8.39% 0.0 -34.5 121.9 Asia/Pacific Asia/Pacific MXAU Index Australia 918.0 1.4% -2.0% 11.7 GACGB10 Index Australia 5.12% 2.6 -27.4 52.3 MXCN Index China 63.8 1.2% 1.9% 11.0 GCNY10YR Index China 3.98% -1.0 58.0 78.0 MXHK Index Hong Kong 10539.0 1.1% 15.6% 16.1 HKGG10Y Index Hong Kong 2.27% 1.4 -26.9 51.7 MXID Index Indonesia 4677.4 1.5% 17.5% 14.0 GIDN10YR Index Indonesia 7.62% -6.8 -36.9 139.2 MXIN Index India 691.5 0.4% -3.8% 14.5 GIND10YR Index India 8.22% 0.6 64.7 MXJP Index Japan 507.1 1.1% -8.7% 13.3 GJGB10 Index Japan 1.12% -1.0 -7.5 91.1 MXKR Index Korea 578.5 1.7% 17.6% 9.7 GVSK10YR Index Korea 4.25% 1.0 -73.0 99.5 MXMY Index Malaysia 576.8 0.0% 19.6% 14.4 MGIY10Y Index Malaysia 3.93% 0.1 -11.1 85.8 MXPH Index Philippines 704.6 1.2% 12.3% 14.2 PDSF10YR Index Philippines 6.65% 5.4 -131.7 138.8 MXSG Index Singapore 1646.4 1.5% 3.4% n.a MASB10Y Index Singapore 2.28% 1.0 -28.0 MXTH Index Thailand 411.4 2.0% 26.0% 11.6 GVTL10YR Index Thailand 3.80% 6.0 63.8 133.5 OTHER INDICATORS CURRENCIES LAST 1D Chg YoY 30D 1Y TICKER LAST 1D YoY 30D 1Y TICKER SPREAD/RATE/INDEX CURRENCY PRICE bps/% bps/% Chart Z-SCORE PRICE %CHG %CHG Chart Z-SCORE ECB Europe EUR003M Index 3M Euribor 1.52% 1.0 78.7 2.2 GBP Curncy British Pound 1.62 0.0% 9.3% -1.2 EONIA Index EONIA 1.31% -2.9 96.0 2.2 CZK Curncy Czech Koruna 16.86 0.2% 24.2% -1.1 EUSA10 Index EUR 10Y Swap Rate 3.37% -0.1 42.6 0.6 DKK Curncy Danish Krone 5.19 0.1% 16.6% -1.0 Non-Euro EU EUR Curncy Euro 1.44 -0.1% 16.8% -0.9 SOBR3M Index Bulgaria SOFIBOR 3M 3.73% -0.6 -45.9 -1.8 HUF Curncy Hungarian Forint 185.89 0.2% 22.2% -1.5 PRIO3M Index Czech Interbank Rate 3M 0.80% 0.0 -4.0 -3.1 NOK Curncy Norwegian Krone 5.50 -0.1% 17.2% -0.8 CIBO03M Index Denmark CIBOR 3M 1.53% 1.2 39.0 2.5 PLN Curncy Polish Zloty 2.77 0.2% 18.9% -1.9 BUBOR03M Index Hungary BUBOR 6.10% 0.0 85.0 1.1 RON Curncy Romanian Leu 2.94 0.1% 16.7% 1.5 RIGI3M Index Latvia RIGIBOR 3M 0.33% 0.0 -71.0 -0.6 RUB Curncy Russian Ruble 27.94 0.1% 10.5% 1.4 LHDRC Curncy Lithuania LTL 3M Deposit 1.35% -24.0 30.0 -6.2 SEK Curncy Swedish Krona 6.37 0.1% 21.7% -1.4 WIBO3M Index Poland WIBO 3M 4.57% 1.0 82.0 2.7 CHF Curncy Swiss Franc 0.84 0.0% 31.2% 0.0 BUBR3M Index Romania ROBOR 3M 5.30% 0.0 -133.0 -1.1 TRY Curncy Turkish Lira 1.61 0.7% -3.4% -1.6 STIB3M Index Sweden STIBOR 3M 2.45% 0.0 175.3 1.2 UAH Curncy Ukranian Hryvnia 7.99 -0.1% -1.0% -1.0 BP0003M Index U.K. LIBOR GBP 3M 0.83% 0.0 9.4 1.5 JPY Curncy Japanese Yen 80.26 0.2% 12.8% -1.1 Non EU Americas SEDA3MRE Index Iceland REIBOR 3M 4.00% 0.0 -345.0 -0.8 BRL Curncy Brazilian Real 1.59 -0.6% 11.7% -1.1 MOIB91 Index Russia Moscow Interbank 4.80% 4.0 -61.0 -0.5 CAD Curncy Canadian Dollar 0.97 0.0% 4.9% 0.0 SF0003M Index Switzerland LIBOR CHF 0.18% 0.0 6.8 0.4 MXN Curncy Mexican Peso 11.81 -0.1% 5.9% 1.2 TRLIB3M Index Turkey TRLIBOR 3m 8.76% 5.0 119.8 2.9 Middle East & Africa Other ZAR Curncy South African Rand 6.73 0.1% 11.9% -1.1 .TED3M Index 3M Ted Spread 22.5 0.0 -20.0 0.2 Asia/Pacific JPEIPLSP Index EMBI+ Spread 296.4 0.0 -10.7 1.2 AUD Curncy Australian Dollar 1.06 0.0% 20.5% 1.2 COMMODITIES CNY Curncy Chinese Renminbi 6.46 0.0% 5.4% -1.7 LAST 1D YoY 30D HKD Curncy Hong Kong Dollar 7.79 0.0% -0.1% 1.2 TICKER COMMODITY VOLATILITY PRICE %Chg %Chg Chart INR Curncy Indian Rupee 44.83 0.0% 3.1% -0.7 Agricultural IDR Curncy Indonesian Rupiah 8598.00 0.0% 4.9% -1.6 SPGCAGTR Index S&P GS Agriculture Index 802.8 1.1% 58.1% 25.1 NZD Curncy New Zealand Dollar 0.81 0.1% 14.6% 1.8 Metals SGD Curncy Singapore Dollar 1.23 0.0% 12.1% -1.4 SPGCINTR Index S&P GS Indus Metal Index 1899.2 0.8% 29.1% 22.0 KRW Curncy South Korean Won 1074.25 -0.4% 10.0% -1.5 GC1 Comdty Gold 1547.0 0.1% 24.8% 9.0 THB Curncy Thai Baht 30.47 -0.1% 6.1% -0.2 Energy TWD Curncy Taiwan Dollar 28.89 -0.1% 10.2% -1.0 SPGCENTR Index S&P GS Energy Index 1084.8 -0.1% 14.9% 24.7 Euro Crosses Indices EURSEK Curncy EUR/SEK 9.2 -0.1% 4.1% 0.1 CRY Index CRB Index 338.1 0.6% 28.7% 16.1 EURGBP Curncy EUR/GBP 0.9 -0.1% -6.5% 1.4 SPGSCITR Index S&P Commodity Index 5074.4 0.2% 22.7% 20.0 EURNOK Curncy EUR/NOK 7.9 -0.3% 0.3% -0.2 DBLCDBAT Index DBIQ Diversified Ag Index 263.6 1.2% 34.7% 15.9 EURCHF Curncy EUR/CHF 1.2 -0.1% 12.3% -2.2 Source: Bloomberg. Updated at 6:30 a.m. LT
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06.22.11 ECONOMICS | European Edition 10
widening, and government bond yields investing in Portugal, in Ireland, in Spain. on Greece versus Germany, for example, So how do they go and hedge that? They Keene’s were also increasing. To say that one go and buy CDS protection, so they are market spotted it earlier than the other, I still investing in those companies. Corner am not sure. But you definitely saw both markets widening out and showing there Saul Doctor, research analyst at JPMorgan Chase, talks with Tom Keene and Ken Prewitt was a lot more risk for a default in Greece about European credit default swaps in the light of and other European sovereigns as well. the debt crisis. Q: And now it is time for the dumb question of the week. Would you buy Greek paper here with those Q: What is the number one thing we wonderful yields? need to know about the relative size of A: Probably some of the short dated stuff PodCast Listen on the web at the bond market with peripheral Europe http://www.bloomberg.com/tvradio/podcast/ontheeconomy.html is going to be okay. But the longer dated Also available on the Bloomberg terminal: BPOD
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