Commentary on the economic , geopolitical and simply fascinating things going on. Served occasionally with a side of snark.
Monday, April 29, 2013
European News and Data - Letta Government begins its work , Italian debt falls below 4 percent for ten year debt ..... Spanish retail sales slide again in March - jobless claims hit consumers need and ability to spend......Photos from Greece's protest Sunday as latest Troika demanded Legislation is passed paving way for latest Welfare and Debt repayment tranche ........
Moments ago the market jeered the announcement of DB's 10% equity dilution, promptly followed by cheering its early earnings announcement which was a "beat" on the topline, despite some weakness in sales and trading and an increase in bad debt provisions (which at €354MM on total loans of €399.9 BNnet of a tiny €4.863 BN in loan loss allowance will have to go higher. Much higher). Ironically both events are complete noise in the grand scheme of things. Because something far more interesting can be found on page 87 of the company's 2012 financial report.
The thing in question is the company's self-reported total gross notional derivative exposure.
And while the vast majority of readers may be left with the impression that JPMorgan's mindboggling $69.5 trillion in gross notional derivative exposure as of Q4 2012 may be the largest in the world, they would be surprised to learn that that is not the case. In fact, the bank with the single largest derivative exposure is not located in the US at all, but in the heart of Europe, and its name, as some may have guessed by now, is Deutsche Bank.
The amount in question?€55,605,039,000,000. Which, converted into USD at the current EURUSD exchange rate amounts to $72,842,601,090,000.... Or roughly $2 trillion more than JPMorgan's.
The good news for Deutsche Bank's accountants and shareholders, and for Germany's spinmasters, is that through the magic of netting, this number collapses into €776.7 billion in positive market value exposure (assets), and €756.4 billion in negative market value exposure (liabilities), both of which are the single largest asset and liability line item in the firm's €2 trillion balance sheet mind you, and subsequently collapses even further into a "tidy little package" number of just €20.3.
Of course, this works in theory, however in practice the theory falls apart the second there is discontinuity in the collateral chain as we have shown repeatedly in thh past, and not only does the €20.3 billion number promptly cease to represent anything real, but the netted derivative exposure even promptlier become the gross number, somewhere north of $70 trillion.
Which, of course, is the primary reason why Germany, theatrically kicking and screaming for the past four years, has done everything in its power, even "yielding" to the ECB, to make sure there is no domino-like collapse of European banks, which would most certainly precipitate just the kind of collateral chain breakage and net-to-gross conversion that is what causes Anshu Jain, and every other bank CEO, to wake up drenched in sweat every night.
Finally, just to keep it all in perspective, below is a chart showing Germany's GDP compared to Deutsche Bank's total derivative exposure. If nothing else, it should make clear, once and for all, just who is truly calling the Mutually Assured Destruction shots in Europe.
But don't worry, this €56 trillion in exposure, should everything go really, really bad is backed by the more than equitable €575.2 billion in deposits, or just 100 times less. Of course, a slightly more aggressive than normal bail-in may be required in case DB itself has to following the footsteps of Cyprus...
And just like that, European banks are back in capital raising mode, starting with what is perceived by some as Europe's strongest bank (alternatively, the most undercapitalized): Deutsche Bank, which at least check had a Core Tier 1 cap ratio somewhere south of 2%.
DEUTSCHE BANK TO SELL UP TO 90 MLN NEW SHARES TO RAISE EU2.8B
NEW SHARES WILL HAVE DIVIDEND ENTITLEMENT FOR 2012
DEUTSCHE BANK SAYS NO PUBLIC OFFERING PLANNED
DEUTSCHE BANK SHRS WILL BE PLACED VIA ACCELERATED BOOKBUILD
PLANS ADDITIONAL CAP MEASURES OF UP TO €2 BILLION IN THE NEXT YEAR
POTENTIAL ISSUANCE OF ADDED SUB CAP INSTRUMENTS
Since this is about 10% of the company's total float, the stock is not happy.
The question why DB announced this just ahead of its earnings release should certainly make one ask just how well capitalized Europe (where every bank purports to having a fortress Basel III balance sheet) truly is?
From the release:
The Management Board of Deutsche Bank AG (XETRA: DBKGn.DE / NYSE: DB) resolved today, with the approval of the Supervisory Board, to execute a capital increase, which is intended to raise gross proceeds of approximately EUR 2.8 billion. The purpose of the capital increase is to strengthen the equity capitalisation of the bank.
It is intended to issue up to 90 million new shares from authorised capital excluding pre-emptive rights. The new shares will have full dividend entitlement for the fiscal year 2012. They will be placed with institutional investors by way of an accelerated book build offering. There will be no public offering. Deutsche Bank AG is acting as sole bookrunner for the offering.
Additionally Deutsche Bank intends to strengthen its total capital structure via the potential issuance of additional subordinated capital instruments of up to EUR 2 billion over the next twelve months.
The securities of Deutsche Bank AG mentioned in this release have not been registered under the Securities Act of 1933, as amended ('Securities Act') and may not be offered, sold or delivered within the United States absent registration under the Securities Act or an exemption from registration requirements.
A month it was the US which saw its savings rate plummet to the lowest since the start of the Second Great Depression...
And now it is the Euro Area's turn to see its savings crumble to 12.2% in Q4 2012, from 12.8% previously, the lowest in, well, ever, since the adoption of the Euro:
Why? Gross disposable income just imploded, dropping at the lowest "growth" rate ever. Notably, wages were a far bigger detractor to income than taxes.
And the same on a per capita basis. Bloodbath:
We know: austerity's fault (just ignore absolutely everything else that is broken in Europe). See how easy that was?
With China and Japan markets closed overnight, activity has been just above zero especially in the critical USDJPY carry, so it was up to Europe to provide this morning's opening salvo. Which naturally meant to ignore the traditionally ugly European economic news such as the April Eurozone Economic Confidence which tumbled from a revised 90.1 to 88.6, missing expectations of 89.3, coupled with a miss in the Business Climate Indicator (-0.93, vs Exp. -0.91), Industrial Confidence (-13.8, Exp. -13.5), and Services Confidence (-11.1, Exp. -7.1), or that the Euro area household savings rates dropped to a record low 12.2%, as Europeans and Americans race who can be completely savings free first, and focus on what has already been largely priced in such as the new pseudo-technocrat coalition government led by Letta. The result of the latter was a €6 billion 5 and 10 year bond auction in Italy, pricing at 2.84% and 3.94% respectively, both coming in the lowest since October 2010. More frightening is that the Italian 10 year is now just 60 bps away from its all time lows as the ongoing central bank liquidity tsunami lifts all yielding pieces of paper, and the global carry trade goes more ballistic than ever.
And have you noticed how quiet things have been regarding the vote of the Cyprus Parliament regarding the bailout - would you really even know it was Tuesday based on msm coverage ?
Stark warning of Cyprus meltdown if bailout not agreed, FinMin warns of return to weak pound
FAMAGUSTA GAZETTE
• Monday, 29 April, 2013
Finance Minister Charis Georgiadis has warned of a complete financial meltdown, a return to a weak pound, unpaid salaries and zero growth if Cyprus does not approve the EU-IMF-EBC bailout tomorrow.
In a joint meeting of the parliamentary finance and foreign affairs committees, Georgiadis made a stark warning that if the memorandum is rejected, the country will suffer a complete financial meltdown and will be unable to borrow money for many decades.
The country will be living with tourists' money, he told MPs, the government will be unable to pay salaries and there will be no growth.
At the same time, the finance minister added, the devaluation of the pound, to which Cyprus will be forced to return to, will be much greater than the eurogroup haircut now being imposed on the Bank of Cyprus.
On Friday, the opposition AKEL party leader vowed to take a 'clear stand' at the vote.
"We are very much concerned about the context of the latest version of the Memorandum of Understanding, with the troika,” Andros Kyprianou told CyBC Radio.
“There are a number of measures that we believe are catastrophic for the economy of the country and that will for sure affect the final decision of our party.”
Asked if his party may vote against the bailout or abstain from the vote, Kyprianou said AKEL members would take a ‘clear stand’.
“According to the discussions we had so far, I believe that (the party) will take a clear stand, it will not abstain for sure.” Kyprianou said that AKEL had prepared an analysis that looks at options available if parliament votes against the bailout, but refused to be drawn on what the study concluded.
The vote in the House is likely to be a close one.
Together, coalition partners DISY and DIKO have 28 out of the 56 seats, not enough to secure the required simple majority.
As head of the Bank of Italy from 2005-11, Mario Draghi was directly responsible for regulating the country’s banks. The seeds of Montei dei Peschi di Sienna’s (MPS) demise were sown at the time. Draghi had the information and the powers to stop what was happening – and block the deal that sealed MPS’s fate. But he chose to do nothing about it.
In fact, The Bank of Italy under Mario Draghi in 2010 spotted the very accounting irregularities that allowed Banca Monte to mask losses, and later forced it to restate profit. In December 2008, MPS borrowed €1.5 billion from Deutsche Bank AG (DBK) as part of a derivative deal codenamed Project Santorini, that helped it disguise losses. Draghi has since contended that Monte Peschi hid documents, impeding his analysis of the “true nature” of the company’s dealings. But both corporate and academic opinion-leaders have gone on the record to assert that this defence is weak and incredible: Draghi, they argue, must have known.
My reliable source in Madrid insists that the end of any belief in Draghi’s honesty came when he subordinated the bondholders as part of the second Greek rescue: “What [Draghi] did was fraud, pure and simple. Going that obligatory route was simply a crooked way of avoiding Greek default. There’s nothing he wouldn’t do to save the euro, and every bond buyer and dealer now knows that.”
Mario himself has never denied his commitment. “There is no going back to the lira or the drachma or to any other currency,” he told reporters last year, “It is pointless to bet against the euro. It is pointless because the euro will stay and it is irreversible.”
But alongside the dishonesty there is also an unpleasant craftiness about the ECB boss. Those of us commenting on the Cyprus crisis were aghast at the way in which Draghi shut himself away and avoided all comment for nearly three weeks; and this too raised suspicions:
“He was a driving force behind the annihilation of Nicosia,” a senior UK wealth-manager insists, “he was at all the key meetings. And then like a cloud, he was gone. For the markets, this gives off all the wrong signals”.
So to sum up, the top man at the European Central Bank signs up to American Friedmanism, is a political Machiavelli reborn, is answerable to nobody, probably played a corrupt role in covering up Montei dei Peschi di Sienna’s illegalities, illegally avoided a Greek default, is happy to suppress wages for profit, has gaily stolen depositor money from Cypriot citizens, prefers others to take the blame….and suppresses all data that might get in the way of his euro steamroller.
Perhaps some of you may find that last point a tad harsh. Well, Mark Grant – author of Out of the Box and a regular contributor to Zero Hedge – is super-bright, well-informed and writes accessible prose. So it was good to note yesterday that he agrees with me about the information blackout taking place at the European Central Bank: so it isn’t just me imagining it after all. As Mark notes in his latest piece:
‘Many people have little or no understanding of what is presently taking place in Europe. This is because it is reported nowhere, discussed in public by no one, and carefully hidden in the data supplied by the European Central Bank.’
I remain astonished at how almost nobody in the old media set is commenting upon the brazen dereliction of reporting duty taking place at the ECB right now. The equivalent failure would be the UK’s ONS suddenly deciding to drop all reporting about employment rates by region, or simply blanking anyone who asks about our balance of payments situation. But then, if you are f**kwitted enough to set up a central bank where the boss is unaccountable to anyone but God (and probably decided long ago that God works for him) this sort of behaviour is going to result. The Sproutian bureaucratic mentality never, ever considers the public responsibility dimension of anything, and this partly explains why Mario Draghi sits atop a banking leviathan….a Goliath of Gath with no David to smite him with just the one clinically aimed slingshot. The rest of the explanation involves the muddled genius of Draghi himself.
‘There is no operator on the planet as politically adept as Mario. He is extremely intelligent, and unassailably smart at the politics. You watch: he will make himself independent very quickly, cut out the Germans, and make himself supremely powerful. He is just what the EU needs”.
The closing part of that observation above was also probably correct in the context of the time, but all things are relative. Trichet was incompetent…but he gave way to Draghi….and in so doing, I think, created a monster.
Talking to a valued US contact last Saturday afternoon, I remarked that Draghi’ssangfroid is comparable to that of Neil Armstrong when landing Apollo 11 on the Moon. With 35 seconds to go to landfall, Armstrong realised that the NASA computer was about to put him down in the middle of a meteor crater. He took over manual control immediately, and lifted it above the walls of the crater towards a safe landing beyond it. While doing this, the Houston sensors logged his heartbeat at a steady 85 bpm, and his bp at 122/80. That’s what Tom Wolfe called The Right Stuff. Mario Draghi has it too: when he faces a potentially antagonistic audience of sceptical financial journalists, he displays zero signs of discomfiture, keeps his voice very steady in that medium range he has, and sends everyone away if not happy, then at least impressed. The difference is that, whereas Neil Armstrong had a pretty clear idea about HTF he was going to get off the Moon again, it seems highly unlikely that – as yet – Draghi knows what to do about the storm of bad derivative calls about to hit the eurozone….and then all stops to Hell via bucket transport Inc.
Forty-four years after the first Moon landing, we have a very clear idea about the early influences upon the world’s most famous astronaut. About Mario Draghi, we know almost nothing. He was born in Rome 66 years ago, went to University there, moved to America to take a further degree at MIT, and graduated in 1977. He was Director general of the Italian Treasury from 1991-2001, after which he spent three years in a senior post at Goldman Sachs International, London. He was appointed Head of Bank of Italy, in December 2005, and then boss of the ECB in November 2011. However, beyond the fact that he has been married to his wife forever and has two adult children, details about his private and early life are extremely sparse.
But be in no doubt: Signor Draghi is ruthless. For some reason bottling out of the ECB job after February 2011, the original favourite Axel Weber was then marginalised by Draghi after his appointment as Big Chief. He soon resigned and now works in the US private sector of banking….where he never misses an opportunity to suggest that Draghi’s guarantees and “loose monetary policy” are doomed to end in tears: he is still firmly of the Austrian economics school, whereas the Italian boss of the EU’s central bank is far more American influenced about debt, leverage and growth.
But if the ClubMed rebellion continues to infect even Germany itself – or Berlin succeeds in getting to FiskalUnion with Schäuble in charge of it – Mario’s wings would be clipped somewhat. And as and when Germany decides enough is enough and herself leaves the eurozone, Draghi will quickly become an Icarus tumbling from Sun to Earth at breakneck speed.
His rock is Germany, and his hard place a growing disenchantment with the “irreversible” single currency. But the main problem with Mario Draghi for the rest of us is that he lacks the ethical alarm system that yells “Stop Now”. He is a man whose job is suffused with moral hazard, but who refuses to see anything beyond one objective: the ultimate triumph of the euro.
Another chapter in the Italy political story comes to a close as a government is formed, for how long who knows, but a familiar figure appears to be playing puppet master:
Italian center-left politician Enrico Letta named a coalition government on Saturday, making one of Silvio Berlusconi’s closest allies deputy prime minister and ending two months of damaging political stalemate.
Letta has said his priorities would be the economy, unemployment and restoring faith in Italy’s discredited political institutions as well as trying to turn Europe away from austerity to focus more on growth and investment.
An inconclusive general election in February left Italy, the euro zone’s third-largest economy, without effective government, threatening investor confidence and holding up efforts to end a recession set to become the longest since World War Two.
Letta, the 46-year-old deputy head of the Democratic Party (PD), said he felt “sober satisfaction” after three days of talks with rival parties produced a government that included a record number of women ministers but few political big hitters.
“I hope that this government can get to work quickly in the spirit of fervent cooperation and without any prejudice or conflict,” President Giorgio Napolitano said.
The anti-establishment 5-Star Movement has refused to join a government which party leader Beppe Grillo said “bordered on incestuous” given the relationship between Letta and his uncle Gianni Letta, Berlusconi’s long-time chief of staff.
So Berlusconi’s hands reaches back into the Italian parliament while the new leadership looks to be attempting an agenda very familiar to his own pre-Monti. Obviously, in a year where the German’s are about to have an election talk of steering Europe away from austerity is just that, talk, but as I noted last week there is a growing audience in the ‘core’ who have good reason to side with Italy.
In the meantime Moody’s has again fired a warning shoot across the Italian economy by leaving them on negative watch:
Moody’s Investors Service has today affirmed Italy’s Baa2 long-term government bond ratings, and is maintaining the negative outlook. In addition, Moody’s has also affirmed Italy’s Prime-2 short-term debt rating.
The key factors for maintaining the negative outlook are:
• Italy’s subdued economic outlook as a result of weak domestic and external demand (especially from its EU trading partners) and a slow pace of improvement in unit labour costs relative to other peripheral countries. • The negative outlook on Italy’s banking system, which is characterised by weak profitability, a deterioration of asset quality and restricted access to market funding, and which indirectly raises the cost of funding for small and medium-sized enterprises (SMEs).
• The elevated risk that the Italian sovereign might lose investor confidence and, ultimately, access to private debt markets as a result of the political stalemate and the resulting uncertainty over future policy direction, as well as contagion risk from events in other peripheral countries.
The key factors behind the affirmation of Italy’s Baa2 rating are:
• Low funding costs, which, if sustained, buy time for the government to implement reforms and for growth to resume.
• The government’s primary surplus, which increases the likelihood that Italy’s debt burden will be sustainable, despite the expectation of low medium-term growth in nominal GDP.
• Economic resiliency, which is supported by the country’s large diversified economy, the relatively low indebtedness of its private sector and the likely availability of financial support, if needed, from euro area members given Italy’s fiscal consolidation progress in recent years and Italy’s systemic importance for the euro area.
Over in Cyprus what everyone knew was going to occur is, that is an ever extending period of capital controls in order to keep the Cypriot banking system alive. Under the bailout agreement, the new Troika plan and pressure from both Russia and Turkey over financial and resource sovereignty the country is in serious trouble and it is little wonder this is occurring:
Cyprus will keep capital controls in place throughout the summer tourist season despite a marginal easing to help struggling local businesses stay afloat, a government adviser said on Friday.
The measures would be lifted only after the restructuring of Bank of Cyprus, the island’s largest lender, a process involving a 60 per cent haircut of uninsured deposits and the acquisition of some assets from Laiki Bank following its collapse last month.
The new date for rolling back is September, but I see no reason to suggest that capital controls will not be in place for well into 2014. I absolutely expect, as we’ve seen with other bailout countries, for Cypriot economic data to come in on the downside of estimates which will continue to put pressure on the government and the banking system for years to come.
Finally, is the little news out of Germany where again the BundesBank appears to be doing its hardest to ensure that periphery Europe has little choice but to give up on experiment ‘euro’, this is particularly interesting in light of the warning from Moody’s on Italy above.
The Bundesbank has lodged a deposition with the German constitutional court (In German) opposing the legality of the ECB’s OMT. Given, as far as I can see, the only thing holding up the entire Eurozone at the moment is the ‘lender of last resort’ function of the ECB I’ve seriously got to question the motives behind such action.
Yanis Varoufakis has some very good analysis on the subject which I advise you to read in full, but I’ll leave you with his conclusion:
Some readers may feel inclined to dismiss my hypothesis as too far-fetched; too conspiratorial. It is perfectly true that I have no evidence that Mr Weidmann has intentionally embraced a strategy of pushing the Eurozone toward disintegration (thus creating an inexorable dynamic that will lead to the DM’s re-introduction). However, a close reading of the Bundesbank’s constitutional court deposition leaves us with only two possible interpretations. One is that Mr Weidmann does not ‘get it’; that he cannot see that a Greek exit in 2012, or an Italian exit in 2014, would spell the end of the Eurozone; that he cannot see that Mr Draghi’s OMT announcement played a crucial role in stopping the disintegration of the common currency last year; that he has no appreciation of the catastrophe facing good, solid Spanish and Italian enterprises due to the broken down interest rate transmission mechanism. The other is my interpretation: Mr Weidman can see only too well that the above hold unequivocally but is tabling this deposition at the constitutional course knowingly and as part of a strategy that leads the euro to a death by a thousand, almost silent, cuts. You take your pick, dear reader: Do we behold a Bundesbank Grand Error or a Grand Strategy, the purpose of which is to bring about a new hard currency east of the Rhine and north of the Alps, unencumbered by the deficit countries and France? I know which interpretation I would place money on.
Personally, given the history of the Bundesbank, and other prominent and vocal German economists, such as Professor Sinn,I’m going to have to go the cynical route on this one and take Yanis’ second option.
Finally today, Friday saw the release of ECB monetary aggregates and whocouldanode, they’re falling again?
Robin Bew, editorial director and chief economist of the Economist Intelligence Unit, predicts that Enrico Letta's government could soon be blown apart.
Bew fears that disagreements between Letta's Democratic Party (PD) and Silvio Berlusconi's People of Liberty (PdL ) could force Italy back to the polls this year.
New #Italy Gov starts work today, but splits so stark (more talk of repealing old policies than discussing new ones) expect new poll in mths
One particular "old" policy is already looming over the new government -- the housing tax imposed by Mario Monti.
PdL wants to hear Letta promise today to abolish the tax and repay the money already paid (around €8bn in total). If not, the party is threatening not to back the coalition.
Renato Brunetta, its leader in the lower house, told the Il Messaggero news paper:
If the prime minister doesn't make this precise commitment we will not give him our support in the vote of confidence.
Italian government begins work with confidence vote
Premier Enrico Letta, left, taking the cabinet minister bell from former Premier Mario Monti yesterday. Photograph: Luigi Mistrulli/Sipa Pre/SIPA
A new era is underway in Italy today as the government led by Prime minister Enrico Letta gets to work, and announces how it will tackle the economic and political crisis raging in the country.
Having been sworn in on Sunday, Letta's government's first task is to win a confidence vote in the Italian parliament. While that shouldn't be a problem for the centre-left and centre-right coalition, the debate will allow the new Italian leader to articulate his vision for the country.
Letta's priorities, in his own words, are to tackle the "enormous, unbearable" economic emergency in Italy, change the pace of Europe's austerity programmes, and reform the discredited Italian electoral system.
He takes over a country suffering a deep recession -- and which is still shaken by the shooting yesterday of two Italian policemen in Rome as the swearing-in took place.
One man was hit in the neck, and a second in the leg, while the alleged gunman has been named as Luigi Preiti, 49, from Calabria, a southern agricultural area suffering high unemployment and organized crime (more details here).
A Carabiniere police officer lies on the ground after being shot outside the Chigi Premier's office in Rome yesterday.
That attack shows the depth of the social crisis suffered by Italians, argued lower house speaker Laura Boldrini, who added:
There's a social emergency that needs answers and our politicians have to start giving them.
The financial markets will also give their verdict on Letta today, when the Italian Treasury holds an auction of five and 10-year government debt.
That sale will be closely watched to see whether investors are still confident in buying Italian debts.
Spanish retail sales slide again amid raging jobless crisis
Another piece of grim economic news from Spain - Spanish retail sales fell by a jaw-dropping 8.9% year-on-year in March, the thirty-third monthly decline in a row, following a 7.7% decline in Febuary.
Another signal that the slump in Spain is actually getting worse, following last Thursday's record unemployment data.
Here's the story of Spanish unemployment in three acts. During the boom, joblessness was relatively high due to persistent structural problems. Then it shot up fast and faster as Spain's building bust and then Lehmangeddon hit in 2008. But it has kept climbing up since the panic abated, albeit at a less catastrophic pace, due to the toxic combination of too tight money and budgets.
In other words, austerity hasn't been the path to prosperity. It's been the path to perma-slump.
But the real story of the Spanish depression has been the story of the indignados: the mostly young, long-term unemployed. It's a bit hard to see just how dramatic it's been in the chart above, so I converted it to a line chart below. Almost all of the increase in unemployment since 2010 has been due to the increase in long-term unemployment of two years or more.
Photos: Yesterday's protests in Athens
There were protests in Athens yesterday as the Greek government approved legislation that will mean 15,000 civil servants are laid off by the end of next year.
Demonstrators marched past the parliament building, and also burned an effigy of a Greek worker, as MPs debated the bills.
The legislation was passed despite the protests, meaning Greece will now receive its next tranche of bailout loans, worth around €8.8bn.
The debate was pretty lively, especially after finance minister Yannis Stournaras introduced a last-minute amendment that would allow firms to avoid paying the minimum wage
Opposition parties complained that the amendment was submitted without prior notice and only a few minutes before the vote was due to take place.
They also complained that the minimum wage was being by-passed. Stournaras defended the measure.
“It is true that €490 is a low wage but do not forget that in these cases we are talking about unemployed people,” he said. “This will be a relief for them.”
Greek finance minister Yannis Stournaras watches main opposition leader Alexis Tsipras speaking during last night debate. Photograph: SIMELA PANTZARTZI/EPA
Borrowing costs drop at Italian debt action
Success for Italy in the bond markets this morning, as traders give an early thumbs-up to prime minister Enrico Letta.
The Italian Treasury has sold its five and ten-year bonds at the lowest interest rates since October 2010.
Here's the details:
• €3bn of 10-year bonds sold at average yields of 3.94%, down from 4.66% last time.
•€3bn of 5-year bonds at average yields of 2.84%, down from 3.65% last time.
That's reassuring news for Enrico Letta as he gets down to business in Rome. Unlike Mario Monti, whose first task 18 months ago was to win back the confidence of the financial markets, Letta's priorities are domestic -- fixing the bleeding economy and reforming the political landscape.
Key event
Consumers and businesses acrosst the eurozone remain gloomy about the economic situation, data just released showed.
The European Commission's monthly measure of economic sentiment fell this month to 88.6, down from March's 90.1. Firms also reported that their business climate has deteriorated this month.
Consumer sentiment improved slightly, but was still deep in negative territory -- at minus 22.3, from minus 23.5 in March.
Submitted by Tyler Durden on 04/29/2013 14:04 -0400
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