Dow was up 22, advancers barely ahead of decliners & NAZ gained 3 as Apple (AAPL) was even ahead of its new product announcements. The Financial Index rose 1 to the 211s, a new high since Apr 2. The MLP & REIT indices were only fractionally changed, junk bond funds rose & Treasuries sold off in a rising stock market. Oil hardly budged although rising tensions in the mideast can bring higher prices & gold went up on bets against the euro bailouts.
Germany’s top court rejected calls to block ratification of the European Stability Mechanism (ESM), triggering a modest sigh of relief from financial markets & clearing the way for implementation of an important tool in Europe’s effort to contain its 3-year-old debt crisis. The court rejected 6 requests for an injunction to prevent Germany’s president from signing the treaty establishing the €500B ($644B) permanent rescue fund which eliminates the threat that Germany would be blocked from participating in the fund & potentially set off a financial panic. It also clears the way for the ECB to employ the program of unlimited bond purchases it detailed last week. The court, however, put limits on the fund. The court said that liabilities can’t exceed the €190B in German financial guarantees granted when parliament approved the fund without further approval from the Bundestag. Obviously, markets liked the news.
Germany Can Ratify ESM Fund With Conditions, Court Rules
Photo: Bloomberg
Prime Minister Rajoy told Parliament it’s not clear if Spain needs help as the ECB crisis plan has cut borrowing costs. There’s no “urgency” because the ECB’s move put the Treasury in a more “comfortable” position, Deputy Economy Minister Fernando Jimenez Latorre said. “The important thing is that when whatever assistance that is needed is requested, that it should be well received in the markets,” Jimenez said. Spanish 10-year bond yields have fallen about 80 basis points since ECB President Draghi said last week the bank could buy cash-strapped nations’ debt if they seek help from the region’s gov-run rescue mechanism first. Rajoy, who denied the nation would need a rescue for its banks 2 weeks before asking for one, risks undermining the rally by postponing the decision. Spain’s 10-year benchmark bond yield fell to 5.6% today from 5.69% yesterday. That compares with 7.17% before Aug 2, when Draghi first said the bank would buy bonds to stem the crisis, & 6.41% on Sep 5, the day before he fleshed out the proposal. Rajoy has been saying since early August that he needs time to assess the details of the plan. The drama is far from over.
Spain Says No Urgency to Seek Bailout as ECB Eases Yields
Photo: Yahoo
Before celebrating, all is not well in the euro zone. A fresh wave of anti-austerity strikes hit Greece as the leaders of the governing coalition struggled to finalize further spending cuts for the coming 2 years, without which the country will lose its vital rescue loans. State hospital doctors, school teachers & local authority employees walked off the job to protest planned salary & funding cuts under a new €11.5B ($14.7B) austerity package. The 3 unions held a peaceful march to the Finance Ministry in Athens carrying banners reading "No to the financial collapse of local authorities" & "We will not pay for the crisis, we did not create it." Conservative Prime Minister Samaras is fighting an uphill struggle on 2 fronts. As well as getting the support of his center-left coalition partners, he has to get the approval of debt inspectors from the EU, IMF & ECB (the "troika"). So far, Samaras hasn't managed to get his coalition partners to sign off on the proposed measures. Samaras will hold a new meeting with the heads of the Socialist PASOK & Democratic Left parties this evening. Earlier, Finance Minister Yannis Stournaras held further negotiations with the visiting debt inspectors, who have rejected already part of the gov proposals. And the Greek drama drags on.
Greece faces more anti-austerity strikes, protests AP
If the bulls had a better control over the markets, stocks could have shot up on the news out of Germany. In addition, it is widely anticipated that Big Ben will have helpful comments tomorrow & extend low interest rates into 2015. But markets are taking a wait & see attitude. Tensions in the mideast are rising faster than anybody predicted. It's hard to find a country there that doesn't have revolutionary problems. Oil is pushing on $100 & gold is on the rise from unsettled conditions around the world. Dow still needs another 55 to reach a new 2012 high.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month | 0.097% | |
U.S. 2-year | 0.242% | |
U.S. 10-year | 1.751% |
| CLV12.NYM | ...Crude Oil Oct 12 | ...97.28 | .... 0.11 | (0.1%) |
| GCU12.CMX | ...Gold Sep 12 | .....1,741.50 | ... 9.70 | (0.6%) |
Get the latest daily market update below:
Germany’s top court rejected calls to block ratification of the European Stability Mechanism (ESM), triggering a modest sigh of relief from financial markets & clearing the way for implementation of an important tool in Europe’s effort to contain its 3-year-old debt crisis. The court rejected 6 requests for an injunction to prevent Germany’s president from signing the treaty establishing the €500B ($644B) permanent rescue fund which eliminates the threat that Germany would be blocked from participating in the fund & potentially set off a financial panic. It also clears the way for the ECB to employ the program of unlimited bond purchases it detailed last week. The court, however, put limits on the fund. The court said that liabilities can’t exceed the €190B in German financial guarantees granted when parliament approved the fund without further approval from the Bundestag. Obviously, markets liked the news.
Germany Can Ratify ESM Fund With Conditions, Court Rules
Prime Minister Rajoy told Parliament it’s not clear if Spain needs help as the ECB crisis plan has cut borrowing costs. There’s no “urgency” because the ECB’s move put the Treasury in a more “comfortable” position, Deputy Economy Minister Fernando Jimenez Latorre said. “The important thing is that when whatever assistance that is needed is requested, that it should be well received in the markets,” Jimenez said. Spanish 10-year bond yields have fallen about 80 basis points since ECB President Draghi said last week the bank could buy cash-strapped nations’ debt if they seek help from the region’s gov-run rescue mechanism first. Rajoy, who denied the nation would need a rescue for its banks 2 weeks before asking for one, risks undermining the rally by postponing the decision. Spain’s 10-year benchmark bond yield fell to 5.6% today from 5.69% yesterday. That compares with 7.17% before Aug 2, when Draghi first said the bank would buy bonds to stem the crisis, & 6.41% on Sep 5, the day before he fleshed out the proposal. Rajoy has been saying since early August that he needs time to assess the details of the plan. The drama is far from over.
Spain Says No Urgency to Seek Bailout as ECB Eases Yields
Before celebrating, all is not well in the euro zone. A fresh wave of anti-austerity strikes hit Greece as the leaders of the governing coalition struggled to finalize further spending cuts for the coming 2 years, without which the country will lose its vital rescue loans. State hospital doctors, school teachers & local authority employees walked off the job to protest planned salary & funding cuts under a new €11.5B ($14.7B) austerity package. The 3 unions held a peaceful march to the Finance Ministry in Athens carrying banners reading "No to the financial collapse of local authorities" & "We will not pay for the crisis, we did not create it." Conservative Prime Minister Samaras is fighting an uphill struggle on 2 fronts. As well as getting the support of his center-left coalition partners, he has to get the approval of debt inspectors from the EU, IMF & ECB (the "troika"). So far, Samaras hasn't managed to get his coalition partners to sign off on the proposed measures. Samaras will hold a new meeting with the heads of the Socialist PASOK & Democratic Left parties this evening. Earlier, Finance Minister Yannis Stournaras held further negotiations with the visiting debt inspectors, who have rejected already part of the gov proposals. And the Greek drama drags on.
Greece faces more anti-austerity strikes, protests AP
If the bulls had a better control over the markets, stocks could have shot up on the news out of Germany. In addition, it is widely anticipated that Big Ben will have helpful comments tomorrow & extend low interest rates into 2015. But markets are taking a wait & see attitude. Tensions in the mideast are rising faster than anybody predicted. It's hard to find a country there that doesn't have revolutionary problems. Oil is pushing on $100 & gold is on the rise from unsettled conditions around the world. Dow still needs another 55 to reach a new 2012 high.
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