Eurozone debt crisis live: European markets to fall
Can the FTSE avoid a tenth straight day of losses? Will eurozone bond yields stop rising?
8.14am: Bond yields will be the hot topic today with Italy trying to get away a chunk of short-term bills. But the problem for Italy is that short-term yields are even higher than the benchmark 10-year bonds. Two-year yields are at 7.38% while 10-year is at 7.16%. It's known as an inverted yield curve, which I suppose just tells us that it's all a bit upside down.
On the subject of bonds, Sam Hill, fixed income strategist at RBC Capital Markets, has been on Bloomberg TV warning that the crisis could soon develop into one of capital flight from Europe, with the continent's banks potentially suffering the heaviest hits.
If the crisis spreads then the next logical step is a flight to quality from Euope as a whole....the banking sector is where the pain would be felt.
He also said that this week's German bond auction failure "should have been an alarm call for the ECB. It's time for the ECB to step up". The crisis is now at the crunch point and said that the prospect of Italy having to raise 320bn on the bond markets next year was "unimaginable" in the current market.
8.05am: The London market has not confounded the forecasters and the FTSE 100 has duly opened down 11 points as I write. Looks a bit better elsewhere though with the Dax in Germany, Spain's Ibex and the Italian bourse all up.
7.51am: Hungary's problems continued this morning with news that Moody's has slashed its bond rating to junk. The government in Budapest, which confirmed this week that it needs another IMF bailout, says it is under "financial attack". The good burghers of Frankfurt must be pretty chuffed that Hungary somehow never joined the eur! o club o r there'd be some serious blood on the carpet.
7.13am: Good morning - thanks for joining us for the live blog. The stock market will be the initial focus today with the FTSE100 in London facing a tenth straight day of losses. It has fallen for the last nine - its worst run since January 2003 when the market was wrestling with the bursting dotcom bubble - and is set to open around 20 points lower. Markets are also expected to be down across the rest of Europe on the back of yesterday's resounding "Nein" from Frau Merkel on the possibility of large-scale ECB action in the bond markets.
German bund yields, by the way, are down slightly this morning at 2.101%. Panic over? Perhaps not. Another test of the market's appetite for eurozone bonds will come today at an auction of 8bn (6.9bn) of six-month Italian debt. Last night the market was indicating yields of a non-too healthy 5.85% so that could be interesting.
The Asian markets didn't much like what they heard from Europe overnight, pushing the euro to a seven-week low of $1.3303. The Nikkei in Japan was down slightly - 0.06% - while the Hang Seng in Hong Kong is down 1.11%. An hour of trading to go there.
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