After the Autumn Checkout European Debt Crisis and U.S. Brewing Rebound

by Jerri Lily - Date: 2010-11-19 - Word Count: 813 Share This!

In the commotion caused by the Fed on interest rates come to an end, the "disastrous" for the euro area to become new focus of concern the global market. Recently Ireland, Portugal and other countries hit a record high premium in bond yields led to renewed investor concerns about the debt crisis for the EU. Affected by this, the market dumped the euro, which bought U.S. dollars, while the United States in October of good employment data for the United States also made investors expected the intensity of secondary cooling of quantitative easing. Analysts believe the dollar short-term oversold technical rally may launch a wave.

Greece, Ireland or into the second

Over the past few days, as investors will focus is shifting away from the Fed, euro zone debt outstanding re-enter the spotlight, the latest trends in the bond market is affecting the investor's nerves, especially the so-called euro-zone " edge of the country. "

Recently, some countries in the euro zone sovereign debt problems again surfaced, such as Ireland. Last week, the Irish government bonds and the cost of default insurance premium in bond yields in the country are reaching record highs. Irish government bonds relative to the same period the yield premium on German government bonds continued to surge in the near future to measure the cost of the debt default of credit default swaps (CDS) prices are also record high for days to refresh, and on Friday set a record high of 580.5 basis points . BNP Paribas is expected that the contract may be further increased to 700 basis points.

Insiders pointed out that from the bond market development, the Irish situation more and more like a few months ago in Greece, Greek government bonds was 900 basis points in CDS was a breakthrough. Therefore, many people are worried might become another Ireland, Greece.

Brown Brothers Harriman & Co. Sean director of emerging markets strategy, said the problems the euro area peripheral countries never actually disappeared, but the past few months the market has been concerned about the Fed might take a new round of quantitative easing. He said a large number of Greek government bonds held by European banks, and Greece may be the debt restructuring will result in heavy losses of these banks.

Decrease the overall strength of the euro area

This week, European countries will focus on the latest GDP growth figures released. Analysts said the new batch of economic data may show that the debt crisis triggered by the austerity measures of the euro zone economy is becoming increasingly serious polarization rather than to improve: on the one hand, Germany and other leaders continue to maintain a steady recovery But Greece, Portugal and Ireland and other countries continued to struggle.

There is evidence that the euro area as a whole weight in the global economy and influence are becoming down, or at least no longer as important as the debt before the crisis.

Last weekend, the International Monetary Fund by the outside world longed to share reform program. Share reform is completed, China's share rose to 3.72% from the current 6.39%, the right to vote but also from the current 3.65% to 6.07%, behind the U.S. and Japan ranked third.

In order to achieve IMF discourse shift to emerging economies, European countries made a schedule of concessions to the IMF Executive Board for the two seats. IMF side pointed out that the reforms will more than 6% of the voting rights transferred to the "active" in developing countries, while weakening the role of some European countries, including Belgium and Germany.

IMF's Strauss-Kahn said, IMF quota and voting rights reform is a "dynamic" process, the share of the arrangements reflect the latest national ranking in the global economy and influence.

U.S. dollar staged Jedi fight back?

Europe by renewed concerns about debt crisis dragged the euro lower over the past two days straight, while the second involved the Fed to quantify the dollar a blessing in disguise, a substantial rebound.

Monday morning in Europe, the euro fell 0.8% against the dollar to around 1.39. The day before the euro fell 1.2% against the dollar, the highest since at least the biggest decline in two weeks. On Friday the dollar index jumped 0.9% on Monday to try to be brave, rose 0.8% in intraday trading, to return to the top 77.

Strategist at Royal Bank of Scotland Gibbs that, given the recent European countries, the yield premium on the edge continues to expand, while the European and American economic data showing the shift in the trend, the euro may tend to fall short. Data released last week showed U.S. payrolls in October for the first time since May there has been increased, to 15.1 million.

Last weekend, U.S. Treasury Secretary Timothy Geithner again referred to the so-called "strong dollar" strategy, to some extent may also support the dollar. Geithner said in Japan that he was happy to reiterate that a strong dollar is in America's interests.

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