Keith Spitalnick

Fears in Europe have escalated a notch amid growing concern on both economic data and political cohesion.  This morning S&P have taken a negative rating action on 16 Spanish banks, in addition press reports out of Germany suggest that a Merkel-Hollande alliance will not be as straightforward as the Merkozy alliance.  At the moment the Euro is holding up fairly well as the market has been selling the USD on sentiment that the Federal Reserve will ease further, however the underlying negative tone will be a concern to the markets.    Continue reading →

Markets were dealt a surprise yesterday as the Consumer Price Index (CPI) rose in the UK to 3.5% up from 3.4% in February according to the Office for National Statistics. The ONS blamed higher food prices specifically soft drinks, bread, cereal, meat, fruit and vegetables coupled with rises in clothing & footwear. However there was some good news as utility bills were lower than one year ago following energy companies reducing tariffs in February last year. All eyes will know be on the Bank of England as this latest rise could reduce the likelihood of additional Quantitative Easing in next months MPC meeting but with stuttering growth the Bank of England may have no choice.  Continue reading →

Italian borrowing costs soared yesterday following new concerns about their ability to reduce its high levels of debt. In the latest auction the Italian government paid an interest rate of 3.89% from 2.76% last month and this has been against the recent trends but investors are becoming increasingly sceptical over Italy’s and Spain’s ability to reach deficit targets. As a result newly elected governments in both countries have announced austerity measures to reach strict debt reduction targets. Continue reading →

After a difficult start to the week which saw the euro wobble amid renewed fears over Spanish and Italian debt, the euro is showing tentative signs of building some gains after a week of selling pressure. The Euro is still heavily under the spotlight as Spanish and Italian debt is still dangerously high, however sentiment that the ECB could resume bond buying has helped to ease fears. The Euro still remains pegged toward 1.31 against the USD and 1.30 remains a key support area for EUR/USD and given the consolidation at 1.31 we could see some recovery towards 1.3150 to 1.32. Continue reading →

The spotlight seems to be returning to Europe after a brief period of calm. The spread between the benchmark German 10 year bond and its Spanish and Italian counterpart’s widened on continued bearish data and rumours that GDP estimates across the southern Mediterranean countries will be sharply revised downwards. The uncertainty remains whether the Euro-zone has enough left in the tank should Spain or Italy need emergency rescue loans, and the worry is dragging down equity markets from recent highs along with risk-currencies like Sterling and especially the commodity currencies which have been the main casualty of recent risk aversion. Continue reading →

According to the Royal institution of Chartered Surveyors (Rics) the number of potential new buyers placing enquires moved up during the month of March. The survey revealed that compared with February 9% more surveyors reported an increase in interest. This was credited to the warmer weather and buyers looking to purchase ahead of the stamp duty holiday end date. Despite this news house prices around the country (except London) continued to fall although some were considered “modest” according to Rics. Continue reading →

The European Central Bank usually meets on the first Thursday of each month but the long weekend coming up means today is the day.  Expectations are for the ECB to leave rates on hold and no change to the non-standard liquidity measures. The upcoming holiday will also see some liquidation of risk positions so expect static or slight declines in equity markets and riskier currencies. The Dollar is benefitting not only from the reduction in risk sentiment but also last nights Fed minutes. The tone was one of cautious optimism over the US economy and the markets interpreted that as a reduction in probability of another round of quantitative easing which is USD positive. Continue reading →

Following last week revision lower of Q4 2011 UK GDP to -0.3%, the immediate focus centred upon whether this would signal a further deterioration in the UK economy and whether the UK would fall back into a recession.  From the look of yesterday’s data it certainly looks like the UK has managed to steer its way out of the red with the help of a surprisingly strong set of manufacturing PMI data.  UK manufacturing PMI’s rose to their highest level in 10 months which led to a bounce in the pound against the Euro and the USD and according to a report by the British Chamber of Commerce the UK will avoid a recession.  In addition the BCC highlighted a rebound in sales and orders activity in Q1 amongst small and medium-sized enterprises after a severely disappointing end to 2011.  This points to a rosier picture for the UK economy which seems to have (for now) shrugged off European concerns and points the growth compass northwards. Continue reading →

We start Easter week with risk sentiment very much on the front foot. Equity markets are a sea of green – for now and risk on currencies are up against the US Dollar. Sterling is trading towards the key levels of 1.60 and 1.20 versus the US Dollar and Euro respectively. UK PMI manufacturing data this morning is also lifting Sterling, with the figure of 52.1 comfortably beating consensus estimates of 50.7. The PMI data gives a gauge of manufacturing activity and future outlook so a higher than expected reading is positive for the UK economy and will lift Sterling. Along with the construction and services PMI tomorrow and Wednesday the Bank of England MPC meet on Thursday. They are expected to keep interest rates and the asset purchase scheme unchanged in what should be quite an uneventful announcement. Continue reading →