· Friday was supposed to be the day that European leaders signed off on the Spanish bailout and returned markets to confidence but we saw a sea of red across equity indices and commodities
· The yield on the Spanish 10yr note implied by the secondary market came within 1bp/0.01% of its crisis high and closed at the highest level so far, rising 26bps to close at 7.185%.
· Risk was off the menu elsewhere too as stocks in Europe fell across the board; Spain’s IBEX -5.82%, Italy’s FTSE MIB -4.38%, Germany’s DAX -1.9% and the UK’s FTSE -1.09%.
· The announcement of the bailout approval came, but was overshadowed by the simultaneous downward revision of GDP forecasts by the Spanish Government which indicated that the economy would not emerge from recession until 2014.
· 2013 GDP is now forecast to contract by 0.5% rather than the previously forecast0.2% growth while unemployment will hang around the 25% level, just to put things in perspective, that’s 2.5X higher than the U.S.
· The Euro made fresh 2 year lows on Friday and has repeated the feat this morning, it’s 20 pips off its lows at 1.2127.
· USD MYR opened higher at 3.1650-3.1710 with the risk offen vironement and last week 3.1400 support proved to hold firm
· Oil was softer, it fell 80c or 0.9%,while softs were harder, corn up 2.2% and soybeans up 2.06%. Gold also rose slightly, up $3 to $1584.5.
· The US had no major data and despite earnings season continuing to surprise slightly on the upside, stocks were dragged lower b the escalating situation in Spain.The S&P fell 1.01% and the DOW shed 0.93%
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