Stock markets have taken a hit as I speak with a 35K jump in jobless claims over in the united states along with a 1.4% rise in m/m Producer prices. Despite the inflationary data bunds have jumped 13 ticks to trade at a high of 123.42 as there seems to be no sign of a sustained recovery in the job market.
Looking forward much of depends on the ongoing uncertainty in the Euro-Zone regarding the “PIGS” (Portugal, Ireland, Greece and Spain). With peripheral spreads remaining at record wide levels for the history of the Euro-Zone, it seems that the issues are far from resolved. It seems only a matter of time when the markets begin to attack the other Euro-Zone peripherals, and should this happen Bunds are looking to trade well above 124s.
Looking at the short end we continue you to see flattening along the curve as red month Euribor continue there march upwards, as there seems to be no signs of any tightening in monetary policy given the current situation.
Looking at tomorrow we have retail sales out of the UK and CPI out of the states. It will be interesting to see if the rise in prices to the producer has been passed on to the consumer.
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