This evening PM David Cameron is dining with EU leaders in an attempt to answer questions and to discuss proceedings, but the mainstream press is adamant that no favors will be forthcoming! News from opposition Labour Party this evening is that Jeremy Corbyn suffered a vote of “No Confidence” (not constitutional) by 172-40, at the same time that David Cameron (Conservative Party) has yet to announce his successor. Although GBP bounced 0.8% today, it remains vulnerable to a turn in confidence. The UK has the benefit of a separate currency to act as the pressure value for the economy whilst Europe has only the peripheral bond markets. Many dealers were discussing the amount of LTRO made available on Friday by the ECB. It was announced that the ECB offered Euro 400Bn at 4yrs at 0%. The last 4yr offered (Sept 24th, 2014) was for Euro 82.6bn.
US stocks followed Europe’s sentiment and were trading 0.5% higher even before the cash market opened. DOW closed 270 points higher with S+P and NASDAQ around 2% better also. Crude managed a 3% rally providing the support the markets were looking for.
US Bond Market saw a little profit taking and a 1bp steepening in the 2/10 curve. US 10’s closed at 1.46% (+2bp) while 10yr Bund closed -0.11%; a spread of +157bp. Italy 10yr closed 1.39% (-11bp), Greece 8.38% (-9bp), Turkey 9.18% (-11bp), Portugal 3.11% (-3bp) and UK Gilt 0.96% (+4bp).