There are still rumblings that ECB will announce this week the reactivation of the SMP (Security Market Program) and as such, yields are generally declining in the EU.
We also found out from Bloomberg that Euro-area unemployment has hit a record high at 11.2%
Near-bankrupt Greece is fast running out of cash while it waits for its next installment of aid from international lenders, a deputy finance minister said on Tuesday. Greece's European partners have repeatedly promised the country will be funded through August, when it must repay a 3.2 billion euro bond, but the details of the funding have yet to be disclosed.
"Cash reserves are almost zero. It is risky to say until when (they will last) as it always depends on the budget execution, revenues and expenditure," Deputy Finance Minister Christos Staikouras told state NET television"
In addition, there is talk from Greek leaders as well seeking to defer painful austerity cuts (here comes a whole new can of worms).
RanSquak says there is unconfirmed market talk of a weaker-than-expected Chinese Manufacturing PMI heightens concerns towards China, with the data due to be released overnight.
In the US...
Personal Income and Outlays
Released On 7/31/2012 8:30:00 AM For Jun, 2012
| Prior | Consensus | Consensus Range | Actual | |
| Personal Income - M/M change | 0.2 % | 0.4 % | 0.2 % to 0.5 % | 0.5 % |
| Consumer Spending - M/M change | 0.0 % | 0.1 % | 0.0 % to 0.3 % | 0.0 % |
| PCE Price Index -- M/M change | -0.2 % | 0.1 % | -0.3 % to 0.1 % | 0.1 % |
| Core PCE price index - M/M change | 0.1 % | 0.2 % | 0.1 % to 0.2 % | 0.2 % |
| PCE Price Index -- Y/Y change | 1.5 % | 1.5 % | ||
| Core PCE price index - Yr/Yr change | 1.8 % | 1.8 % |
Pre-market this morning, French President Hollande trumpeted the strong words of the ECB's Draghi from last week, he more or less repeated the ECB mantra, "All will be done to defend the Euro". It was only minutes later that CNBC's Steve Liesman, by way of Germany's Bundesbank was told,
"MONETARY POLICY SHOULD FOCUS SOLELY ON PRICE STABILITY, STATES NEED FISCAL INTERVENTION"
Germany responded quickly to Hollande and forcefully using the Bundesbank to tell the world and the ECB, they DO NOT endorse the reactivation of the SMP program, I told you things were going to get hot between these two former allies (Germany and the ECB or Germany and France, you choose).
The reaction was immediate in the bond market as the lower yields in the sovereigns were stopped dad in their tracks.
In addition Germany fired another salve, GERMAN SAVINGS BANKS GROUP REJECTS BANK LICENSE FOR ESM.
Germany was not done... minutes later German Finance Minister Shauble (as Merkel is still on vacation) said:
- GERMAN FINANCE MINISTRY SEES NO NEED TO GIVE ESM BANK LICENSE
- GERMAN MINISTRY SAYS THERE ARE NO SECRET TALKS ON BANK LICENSE
- GERMAN MINISTRY SAYS NOT HOLDING TALKS ON BANK LICENSE FOR ESM
Back to the US...
At 9:45 Chicago PMI was released...
Released On 7/31/2012 9:45:00 AM For Jul, 2012| Prior | Consensus | Consensus Range | Actual | |
| Business Barometer Index - Level | 52.9 | 52.5 | 49.0 to 54.3 | 53.7 |
As for the QE sentiment indicator, gold, here's the reaction after the 9:45 release.
We'll take a closer look at GLD as well as the rest of the market's opening indications, but for now, it's all about what, if anything can or will the Central Banks do as the F_E_D just got some not so QE friendly data and the ECB got some not so friendly German statements-remember who controls the EU.
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