ETX Capital Daily Market Bite, 28th February, 2013: Markets Steady Thanks To Fed And ECB Support
February 28, 2013 11:40 am
February 28th, 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
Stock markets are pouring on modest gains Thursday after central bankers Ben Bernanke, head of the Fed and Mario Draghi, head of the ECB, both defended their easing policies, lending support to risk-appetite overnight on Wall Street and in Asia.
Bernanke at his second day on Capitol Hill again talked up the Fed’s ultra-easing policy stance, quashing some of the fears sparked by the Fed’s last meeting minutes that the central bank may look to slow down QE. Draghi meanwhile reiterated importance of conditionality for any nation that wants to tap into the ECB’s bond-buying programme.
His comments were in light of the inconclusive Italian election outcome earlier this week which has raised the spectre of bailouts for Spain and Italy as bond yields are under pressure. This renewed uncertainty which is likely to persist dents the outlook for the euro zone in the mid-to-near-term for investors who are eyeing key levels on Italian and Spanish 10 year bond yields – moves above the 5% mark on Italy’s and above 6% for Spain’s would be deemed as unsustainable in the eyes of many market participants.
It would only then be a matter of time before Spain’s PM Rajoy could look at calling the ECB to activate the OMT. Stateside, the US continues to print a string of strong economic data although caution will creep in with the upcoming sequesters.
Looking to today’s session German jobs data will be eyed closely together with CPI from the country later. The euro zone as a whole print harmonized CPI while in the US, we have weekly jobless claims, the 2nd estimate of 4Q GDP which will be under the spotlight ahead of the budget battles in Washington. We also have Chicago PMIs.
February 28th, 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
Stock markets are pouring on modest gains Thursday after central bankers Ben Bernanke, head of the Fed and Mario Draghi, head of the ECB, both defended their easing policies, lending support to risk-appetite overnight on Wall Street and in Asia.
Bernanke at his second day on Capitol Hill again talked up the Fed’s ultra-easing policy stance, quashing some of the fears sparked by the Fed’s last meeting minutes that the central bank may look to slow down QE. Draghi meanwhile reiterated importance of conditionality for any nation that wants to tap into the ECB’s bond-buying programme.
His comments were in light of the inconclusive Italian election outcome earlier this week which has raised the spectre of bailouts for Spain and Italy as bond yields are under pressure. This renewed uncertainty which is likely to persist dents the outlook for the euro zone in the mid-to-near-term for investors who are eyeing key levels on Italian and Spanish 10 year bond yields – moves above the 5% mark on Italy’s and above 6% for Spain’s would be deemed as unsustainable in the eyes of many market participants.
It would only then be a matter of time before Spain’s PM Rajoy could look at calling the ECB to activate the OMT. Stateside, the US continues to print a string of strong economic data although caution will creep in with the upcoming sequesters.
Looking to today’s session German jobs data will be eyed closely together with CPI from the country later. The euro zone as a whole print harmonized CPI while in the US, we have weekly jobless claims, the 2nd estimate of 4Q GDP which will be under the spotlight ahead of the budget battles in Washington. We also have Chicago PMIs.
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