Wednesday, May 5, 2010

Spain, Greece, Ireland and Portugal PIGS


· Spain - European Commissioner for Economic and Monetary Affairs Olli Rehn said Wednesday there was no need to create a bailout plan for Spain.  DJ 

· Europe debt levels - Rehn said government debt will continue to rise “for some time,” while annual deficits should peak next year in the euro area.  Bloomberg 

· Greece - EU's Rehn on Greece - "In the next two years, Greece will not have to resort to private financing, up to 2012, but the funding by the euro member states and the IMF will cover fully Greece's financing needs up to 2012....We assume Greece should be able gradually to return to the financial market. Still beyond 2012, we will partly cover the financial needs of Greece if needed."   Reuters

· ECB’s Weber said there is a threat of “grave contagion effects” from the Greek fiscal crisis in the euro area; Weber says Greece may not need the full IMF/EU bailout – Bloomberg 

· ECB should avoid “QE siren call” – printing euros to buy European gov’t debt would be “disastrous” according to the WSJ

· Europe - Germany's Merkel says Germany will live up to its responsibility for Europe and will help to prevent damage to the euro zone in future – DJ

· European Commission Released revised 2010 Forecasts – European Commission increased its forecast for eurozone growth to +0.9% for 2010 from +0.7%. UK saw a large positive revision (+1.2% from in 2010 vs. prev. +0.6%). Eurozone’s budge shortfall is now expected to be 6.6% of GDP, dn from last November’s forecast of 6.9% but still above the EU’s limit of 3%. Inflation expected at 1.5% this year, up from prev. forecast for 1.1% and below the ECB’s target target range of 2%. Reuter/Bloomberg

· Eurozone Apr. Composite PMI slightly stronger than expected. Rose to 55.6 from 54.1 vs. St. 55.5. DJ

· Eurozone March Retail Sales come in light. Flat vs. St. +0.4%. DJ

· Greek Strikes – Strikes continued Wednesday to protest the latest round of wage and pension cuts, effectively closing down Greek airports (air-traffic controllers walked off their jobs causing Athens Int’l Airport to cancel all flights into and out of the airfield for the day).

· Ireland, Scotland flights still seeing delays - Flights to and from Ireland and Scotland faced fresh disruption on Wednesday from the Volcanic Ash Plume - CNBC

· Romania stocks sell-off amid worries that the gov't was considering tax hikes to meet conditions of an IMF-led aid package.  However, Reuters is reporting that the IMF will agree to a wider budget deficit target for Romania.  "For sure we are going to see a revision of the budget deficit target. The external conditions have worsened and consequently some macroeconomic indicators." Reuters

· Iceland - Central Bank cut benchmark interest rate 50bps. Bloomberg

· Portugal - Sells EUR500M 6-Month Treasury Bills; 6-Month Treasury Bill Average Yield Set At 2.955%; Bid-To-Cover Ratio 1.9; yields were four times higher than in the previous sale  (DJ)

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