September 14 2012

In the broadcast today: Can the USD Recover from “QE Forever”? In the aftermath of the Fed’s unprecedented “QE Forever” announcement, we examine its future implications and ponder what it would take for the USD to recover from this “shock and awe” FOMC decision, we list the Top 10 spotlight economic events that will move the markets in the week ahead, we examine the consensus forecasts for the upcoming economic data, we analyze the bullish breakout in the EUR/USD currency pair, we continue to monitor the rally in the GBP/USD pair, we keep an eye on the USD/JPY currency pair ahead of next week’s Bank of Japan meeting, we highlight the market’s reaction to the FOMC monetary policy decision, the Euro-zone HICP, and the U.S. Retail Sales and Consumer Sentiment, we discuss new forecasts from Morgan Stanley, Bank of New York-Mellon and Credit Suisse, and prepare for the trading week ahead.

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Christine Lagarde suggests extending Greek financial programme. Spain to present new reform plan. ECB denies working on Spanish bailout. Markets cheer QE3, while the U.S. dollar sell-off continues across the board…

Powered by article titled “Eurozone crisis live: Greece may get more time, Spain plans new reforms” was written by Graeme Wearden, for on Friday 14th September 2012 15.19 UTC


Jorg Asmussen of the ECB is also taking part in this afternoon’s press conference (see last post).

He said that he hopes to have agreed the details of a single banking supervisor by the end of 2012 (although he admitted this would be tough.

Asmussen also said that any decision from Spain on a bailout was “totally at their discretion”


Our second press conference of the day is now underway in Cyprus.

You can watch it live here

I actually missed the start, but apparently it began with Vassos Shiarly, Cyprus’s minister for finance, admitting that the room was packed with journalists (by Cypriot standards anyway):

 Olli Rehn, European Commissioner for Economic and Monetary Affairs, is also taking part. He told the media that he expects to see an economic recovery in Europe next year, and added that countries who have run a current account deficit now need to achieve a surplus so they can start reducing their debt levels.

Asked about the situation in Spain, Rehn said that Madrid must “maintain momentum” in reforming its economy.


Playing chicken…. the Spanish conundrum

Sovereign bond expert Nick Spiro has published a good note this afternoon about the Will they? Won’t they? confusion surrounding Spain’s possible bailout:

Called The Spanish conundrum, it argues that Madrid is playing a game of chicken with the rest of the eurozone and the IMF.

As recently as 10 days ago, Mariano Rajoy, Spain’s embattled premier, was still urging the ECB to put in place a credible bond-buying programme to lower Spain’s punitive borrowing costs. Now, he wants to steer clear of the scheme.

With Spanish 10-year bond yields around 5.8% this afternoon (compared with 7.6% in July) Rajoy is under less pressure to act – and the eurozone isn’t exactly eager to break the standoff either:

Investors do not want to throw in the towel just yet for fear of missing out on another rally if and when a bond-buying programme for Spain kicks in, while the ECB would prefer not to have to launch the OMT given the numerous risks attached to the programme.

But can it last? No, it can’t.

Spain will require some form of external assistance fairly soon given the scale of its banking, sub-sovereign and sovereign-related problems and the markets’ conviction that Spain is unable to go it alone, unlike Italy whose chances of soldiering on without external assistance are much stronger in our view.


The word from Cyprus is that today’s Ecofin meeting has ended, and (wait for it) … that’s earlier than expected. A press conference is now expected … (that’s via the WSJ’s Matina Stevis, who also tweets a pic below).


Here’s a shot of the official group photo of today’s informal European economic and financial affairs council being taken.

We don’t have any fresh developments from the gathering of EU finance ministers. Perhaps lunch dragged on. If so, regular reader James Wilkins of Thessaloniki, Greece, hopes they made some progress.

He writes:

Something for the economics ministers to discuss over their lunch – Is it possible to have an ‘economic reform plan’ which does not rely on robbing the poor? If Spain can achieve that, there is still hope for Europe.

Many of the measures in Spain’s current €65bn austerity plan will hit the poorest hard, though: including raising VAT and cutting unemployment benefits.


Wall Street is sharing today’s rally, with the Dow Jones opening 64 points higher at 13604, a gain of 0.4%,

That’s less impressive than the gains in Europe and Asia…but comes on top of the 206 point jump yesterday after QE3 was announced.


The euro keeps climbing, and just hit $1.312 against the US dollar – up more than 1.5 cents today alone.

It got a boost from the latest US retail sales figures, which beat expectations by rising 0.9% in August. However, core sales were weaker than planned, implying the US economy is weaker than thought.

New US industrial production data was also disappointing; with output down by 1.2% in August.

If Ben Bernanke hasn’t just launched QE3, the pressure for a new stimulus package would now be intense…


Market update

Louise Cooper, market analyst at BGC Partners, sums up the stock market rally with a simple point – where else would you put your money?

I would be reluctant to lend the British government my hard earned money for 10 years to receive just 1.8% back per annum (that’s the current 10-year gilt yield) that is unlikely to even keep up with inflation.

The quantitative easing programme launched by Ben Bernanke last night is meant to help the US economy, but Cooper questions whether QE will help businesses:

If QE holds up equity prices by making bonds expensive, then that would be a good thing if companies then used their elevated stock prices to issue new shares to grow or indulge in acquisitions of overseas companies to expand. With equity issuance flat on the floor, that does not seem to be happening.

If cheap debt persuaded companies to build and expand through borrowings then that would also be a good thing, but I am not sure it is. Businesses are just too nervous about the future and are desperately (one assumes) putting together contingency plans for the collapse of the euro and resultant currency depreciation.

It must be hard to prepare financially for a potential euro armageddon (with all the unknown unknowns that entails) and at the same time be jollied into expansion via cheap debt (which got many companies into trouble in the very near history).

And the markets remain pretty high, too:

FTSE 100: up 77 points at 5896, + 1.3%

German DAX: up 90 points at 7400, +1.24%

French CAC: up 62 points at 3563, up 1.8%

Spain’s IBEX: up 181 points at 8118, + 2.3%

Italian FTSE MIB: up 344 points at 16588, +2.1%



Eurozone finance ministers headed off to lunch with Christine Lagarde and Mario Draghi after their press conference in Nicosia this morning (see 11.40 onwards for highlights).

As the picture above shows, there was quite a jovial feel about today’s proceedings (tho I suspect Spain’s de Guindos wasn’t joining in).

It appears that there are three main points to note from the press conference

1) Spain is drawing up a new reform plan to present later this month (see 11.52am)

2) Greece has won more support for its call to be given more time to hit its targets, with Christine Lagarde suggesting it is an option (see 12.02pm)

3) A decision on whether Greece is complying with its austerity targets may not come for another six weeks (see 13.16pm)


Greek finance minister Yiannis Stournaras struck a positive tone in Cyprus, as he spoke to reporters after this morning’s discussions.

Stournaras said he was confident that Greece’s lenders would make a final decision on whether to adjust its reform programme, and hand over the next aid tranche, before November.

Stournaras also hinted that Spain, not Greece, had dominated the discussions, saying:

Greece was a small part of discussions today. The climate was rather positive. We will try to finish everything by the end of October.

There is progress in discussions with the troika… We will try to finalise (that) as soon as possible, to be ready for final decisions at the latest by end of October.

As we blogged earlier (see 11.21) Stournaras’s strategy was to argue convincingly that Athens is serious about meeting its commitments, making cuts, and reforming its economy, with the aim of a) getting the next aid tranche, and 2) being given more time.


Spain to present National Reform Plan

Perhaps the most important news to come out of Cyprus this morning is that the Spanish government is getting ready to present a new economic reform programme.

This was disclosed by Jean-Claude Juncker and Olli Rehn during this lunchtime’s press conference in Nicosia.

Reuters now helpfully has the full quotes from Rehn:

On fiscal policy and structural reforms, it is essential to keep the momentum. [Spain's economy minister Luis] de Guindos expressed very clearly that Spain is ready to take the necessary action to meet the fiscal targets, which are certainly in reach.

Rehn added:

Minister De Guindos also informed the Eurogroup today that the Spanish government intends to adopt a national reform programme by the end of September based on recommendations of the European Union with very clear commitments and precise timetables.

So where does this fit in with a possible Spanish aid request? Madrid is wary of asking for help because of the potential loss of sovereignty (ie, the “conditionality” insisted on by the European Central Bank). But if it presents a new reform plan before applying for assistance, perhaps it can argue that any conditionality is simply in line with its existing plans?



We’ve just seen a clear signal that Greece IS going to be given more time to hit its targets.

During an ongoing question and answer session in Nicosia, Eurogroup chief Jean-Claude Juncker told reporters that they can exclude the idea of Greece leaving the euro.

Juncker added that he does not expect that the Troika’s report into Greece’s finances will be ready until October.

Christine Lagarde (who had earlier pointed to the progress in Ireland and Portugal), also made conciliatory noises about Greece.

The IMF boss said:

It is clear that Greece has already produced a huge effort, but it must continue to do it….

More time is something we can examine.

Last month, Greek prime minister Antonis Samaras visited Berlin and Paris to argue for Greece to be given an extension. Perhaps that diplomatic push has paid off…. (especially given the comments from Dutch and Austrian ministers this morning)


One more highlight from the press conference in Cyprus: The European stability mechanism (ESM), the new permanent rescue fund for the eurozone, will come into operational on 8 October.

Klauis Regling, head of the temporary EFSF, told reporters that the ESM is already starting to pitch investors. This follows the German constitutional court’s decision to reject a complaint against the ESM.


Christine Lagarde, head of the IMF, has officially denied that she and Mario Draghi are secretly plotting a Spanish bailout (as reported this morning).

As Lagarde puts it:

There has been some speculation that Mario Draghi and I are in deep negotiations over Spain… I can assure you we are not.

Lagarde adds the the IMF is impressed with the way that Ireland and Portugal have implemented their fiscal reform programs, saying Europe can point to “some success stories”.


Olli Rehn is also speaking in Cyprus.

Rehn says it has been a good week for Europe, after the ECB’s bond-buying programme announced on 6 September.

Rehn says:

There is no more room for complacency today than there was six months ago, but I do believe we are moving in the right direction.

On Spain, Rehn says that its financial sector programme is “fully on track”, and says he is looking forward to seeing the results of Spain’s bank stress tests.

UPDATE: Both Rehn and Jean-Claude Juncker spoke about Spain drawing up a new programme of reforms, which could be ready by the end of this month…. The prelude to a request for help?



The Eurogroup press conference in Nicosia, Cyprus, is now underway.

Jean-Claude Juncker, head of the eurogroup, begins by telling journalists that Spain assured this morning’s meeting that it will hit its targets this year.

Juncker adds that Spain “will adopt more measures if needed” to keep its economic reforms on track.

On Greece, Juncker says that Greece is aware that it needs to demonstrate “very strong delivery” in the next few weeks (a reference to the ongoing push to find the €11.7bn of cuts needed).

But a decision on its next aid programme will not be taken until the second half of October, Juncker adds


Here are a few pictures from the Eurogroup meeting in Nicosia today (press conference expected shortly)

Here, ECB president Mario Draghi (right) shares a joke with German finance minister Wolfgang Schäuble (bottom) ECB board member Jorg Asmussen (left) and IMF chief Christine Lagarde (middle):

And here, Greek finance minister Yiannis Stournaras listens to Poul Thomsen, the IMF’s mission chief for Greece.


Greek officials hope that today’s Eurogroup meeting in Nicosia will mark the long-desired ‘turning of the page’ for Athens.

They say Greek finance minister Yiannis Stournaras will use the meeting to tell fellow ministers that the Athens government “means business”.

This morning’s comments from EU fiscal hardliners Holland and Austria that Greece budget targets could be extended if it’s recession is worse than thought (see 8.39am) have also been welcomed by senior Greek officials.

Athens correspondent Helena Smith reports:

Prolonging the country’s fiscal adjustment program, would officials say, give the breathing space Athens requires to apply reforms. Yiannis Stournaras, who is expected to be in close contact with prime minister Antonis Samaras throughout the day, will give an “outline” of the near €12bn package of cuts international lenders are demanding in return for the next €31.5bn installment of aid the country so badly needs.

The tranche, which has been withheld since July, has been delayed by ongoing disagreement over the cuts in Athens’ shaky three-party coalition. Finance ministry sources say the package will have to be concluded – and ratified – by the Greek government in time for the next euro group meeting on October 8.

“Stournaras had badly wanted to give colleagues a thorough run-down of the measures in Nicosia,” said one insider. “He is determined to show that Greece means business and will stick to its commitments.”

The country’s coalition leaders will meet again next week in what many hope will be a final attempt to forge consensus over the cuts. The proposed measures have already whipped up a storm of protests with pensioners, police, military personnel, disabled people, teachers and doctors taking to the streets.

In what is being hailed as one of the first tangible signs in a change of outlook for Greece, the European Investment Bank has also agreed to inject up to €750m into the cashed-starved Greek economy with immediate effect. The money will be invested in various sectors such as energy, education, transport and small businesses – all of which have been badly hit by the ongoing crisis. After co-signing the accord in Athens Stournaras said: “This is an important move that brings money into the real economy at a time when liquidity crunch has caused suffocation in the market.”


Interesting … Mario Draghi, president of the European Central Bank, will be invited to address the lower house of the German parliament about his new bond-buying plan.

Petra Merkel, chair of the Bundestag’s budget committee, asaid this morning that an invitation was being prepared…

UPDATE: I initially wrote that it wasn’t clear whether Draghi would take up the offer. That was not terribly bright. Super Mario actually prompted the invitation by Germany’s Sueddeutsche Zeitung newspaper that he would be delighted to address German MPs.

As Draghi put it in this morning’s edition:

If the Bundestag invited me, I’d gladly come

That would be a good opportunity to explain what we’re doing.

More here on the FT. That interview appears to have led Merkel to get the best writing paper out. (with thanks to twitter user Roel Derhaeg)


Market rally holds firm

In the City, the Footsie is at its highest level since March. Other markets are also buoyant (haven’t they read Nouriel Roubini yet?)

FTSE 100: up 88 points at 5908, + 1.5%

German DAX: up 109 points at 7419, +1.49%

French CAC: up 70 points at 3572, up 2%

Spain’s IBEX: up 201 points at 8137, + 2.55%

Italian FTSE MIB: up 343 points at 16592, + 2.1%

The prospect of another $40bn of quantitative easing each month from the Federal Reserve (see 7.32am) has also pushed up the oil price to a four-month high. The cost of a barrel of New York crude hit the $100 mark a few minutes ago, for the first time since mid-May.

That follows the drop in the value of the dollar today, which saw the pound hit a four-month high of $1.621.

Mining shares are leading the rally in London, with Kazakhmys up over 12%.

David Jones, chief market strategist at IG Index, explains:

What wasn’t expected – and explains the particularly exuberant reaction by markets – was the open-ended nature of [Bernanke's] latest plan, with the US committing to buy bonds until the economy improves. All of this has raised hopes of providing a shot in the arm for the global economy, and mining stocks are the biggest winners so far this morning on the expectation of greater demand for commodities.



The European Central Bank has denied that it is negotiating the details of a €300bn bailout for Spain (as reported in Dutch business newspaper, Het Financieele Dagblad today, and blogged at 8.48)


Today’s eurogroup meeting in Nicosia comes amid ongoing negotiations over its own need for financial assistance.

Talks over a possible bailout for Cyprus took place last night, as our correspondent Helena Smith reports:

IMF chief Christine Lagarde kicked off her meetings in the Cypriot capital, Nicosia, holding a round of talks with the island’s president Demetris Christofias.

The leader, a veteran communist, went into the discussions saying their focus would be the EU-IMF financial assistance Cyprus has sought as a result of its banking system’s heavy exposure to debt-stricken Greece.

The IMF managing director emerged from the colonial era presidential palace where the talks took place late Thursday, saying:

“We had a good and productive engagement about the ongoing discussions concerning Cyprus.”

But she refused to shed light on when Cyprus, the fifth eurozone member to request international rescue funds, would get the assistance. Christofias, who has also sought a €5bn bilateral loan from Russia – with which Cyprus maintains close business ties – said the bailout accord would be signed “when we are ready”.

Officials representing the EU, ECB and IMF, the “troika” of bodies that would give the aid, have indicated that the island’s public finances are much worse than initially thought and that in return for the bailout, estimated at as much as €10bn for an economy whose entire GDP is just €17bn, the Cypriot government would have to slash salaries and pensions, press ahead with privatisations and overhaul the pension system.

The government, which faces re-election next February, has attempted to play down the measures with officials repeatedly saying they will not follow the example of crisis-hit Greece where EU-IMF mandated austerity measures have pushed the country into its worst recession since the second world war.


Economist Nouriel Roubini isn’t impressed by the way that stock markets have rallied strongly on the back of America’s new quantitative easing programme.

Shares have been edging, or occasionally leaping, higher for some months now. Either because good economic data has suggested the world economy is in better shape, or because bad economic data has prompted speculation that central bankers will intervene.

As Roubini puts it:

markets that rise on both good and bad news are not stable markets. “Risk-off” episodes, in which investor sentiment sours, are likely to return if economic news worsens and confidence in policymakers’ effectiveness drops.

And there are plenty of reasons to be nervous. The uncertainty over a Spanish bailout, ongoing fears over Greece’s aid package, the looming US fiscal cliff, China’s slowing economy….


Euro inflation data

Eurozone inflation for August has been confirmed at 2.6%: above the ECB’s target of slightly below 2%.

Energy costs are blamed for the rising cost of living. Strip out, and the underlying Consumer Prices Index comes in at 1.7% year-on-year.


The euro has burst back above the $1.30 mark against the US dollar this morning, after Ben Bernanke announced QE3.

The Fed’s determination to see the US labour market recovering, at the expense of inflation, has driven down the dollar across the foreign exchange markets.

Jane Foley, currency expert at Rabobank, says:

The Fed’s action will undoubtedly re-awaken the theme of ‘Currency Wars’…

A weaker euro would have helped the eurozone export its way out of its downturn, so Europe’s manufacturers may be watching the Fed with some concern.


On the Spanish bailout (see 8.48am), Spain’s economy minister was pressed about the issue at the start of today’s talks in Cyprus.

Luis de Guindos told reporters that Madrid is more concerned about hitting its deficit targets, adding that euro ministers would discuss the details of the ECB’s new bond-buying programme in general terms.

De Guindos said:

It is much more important to meet our public deficit targets and comply with our programme of reform than a potential rescue

The fundamental question here is to establish the elements of what could be an intervention of the ECB on the secondary market. I believe that’s what we will do today, although it will be in a generic way and not directly in relation to Spain.

In reality, though, Spain is likely to be the first country to apply for assistance via the OMT programme.

Analysts believe euro finance ministers will give de Guindos a tough time today, and press him for details of what Madrid plans to do.

Irish finance minister Michael Noonan, for example, will demand clarity. He todl reporters that:

I’d like them to set out their position because it hasn’t been clear over the summer what their position is.

Spain may argue that there is no rush, with its borrowing costs now much lower than a couple of months ago.


We’ve seen some worrying economic data from Spain this morning.

1) House prices are falling at a record level. Prices tumbled by 14.4% in the second quarter of 2012.

2) Spain’s national debt has risen again, to 75.9% of GDP in Q2. That’s up from 72.9% in the first quarter of this year.

3) Spanish banks are even more dependent on European Central Bank funding to keep afloat. They borrowed €411.7bn from the ECB in August, a new record.



The Dutch business newspaper, Het Financieele Dagblad (Financial Daily) has a strong story this morning, quoting well-informed sources as saying that the European Central Bank and the International Monetary Fund are in negotiations over a bailout for Spain of up to €300bn.

FD says ECB chief, Mario Draghi, and Joerg Asmussen of the ECB executive are negotiating with Christine Lagarde, the IMF head, and her senior sidekick, David Lipton. (FD’s story here, but behind a paywall).

Our Europe editor Ian Traynor reports:

A successful negotiation, requiring a bailout request from Mariano Rajoy, the Spanish prime minister, and the signing of a memorandum of understanding, could trigger the first ECB interventions after Draghi’s announcement last week of unlimited ECB purchases of government bonds in the secondary market.

Draghi is said to be insisting on IMF involvement if the ECB is to act, meaning that the IMF would scrutinise the Spanish situation, set the terms for what Spain must do to get the aid, and report back on Spanish observance of the terms. The central banks of Spain, Italy, and France are said to oppose this IMF role.

As mentioned earlier, eurozone and EU finance ministers are expected to discuss a possible Spanish bailout at their meeting in Cyprus.

Ian adds:

The €300bn figure is the scale that Wolfgang Schäuble, the German finance minister, put on Spanish requirements before the summer break when briefing the German parliament to secure backing for the €100bn Spanish banks rescue package already agreed.

Speaking of Schäuble, he also told reporters in Nicosia that the European Stability Mechanism probably won’t be ale to recapitalise banks before January 2013.


Euro finance ministers suggest more time for Greece

In Cyprus, two ‘hardline’ finance ministers have suggested that Greece could be given more time to hit its targets.

But not a full-scale third bailout, with extra financial support.

Speaking to the media at the start of the two-day Eurogroup meeting in Nicosia, Dutch finance minister Jan Kees de Jager said that if Greece’s recession is deeper than expected, perhaps it could be given more time to hit its targets.

De Jager said:

If the deficit turns out to be somewhat worse than expected because of a temporary downturn in the economy, there could be some time but not money, not extra money.

Austria’s Maria Fekter made similar comments on Greece, telling reporters that she was open to some flexibility:

We will give them the time they need for that, but probably not more money.

Prime minister Antonis Samaras has been quietly pleading for more time for some weeks now, saying that extending Greece’s targets by two years would be a huge help.

But in this case, time=money. A two-year extension would require around €20bn of funding (perhaps through extending loan repayments, or extra short-term borrowing). The key issue is whether an extension can be devised in a way that doesn’t force eurozone governments to pay again.


The FTSEuroFirst 300, which tracks stocks across Europe, has hit a 14-month high this morning (see 8.05am for more details of individual markets).

As with previous electronic money-creating schemes, the QE3 programme announces last night is having an immediate impact on share prices.

Justin Haque, a pan-European trader at Hobart Capital Markets said, summed it up thus (to Reuters):

The market is now stuffed with cash.

Quantitative easing’s long-term impact on economic recovery, though, is more questionable. Previous rounds of money printing have hit emerging markets, with investors spending their new dollars on higher-yielding, higher-risk currencies, assets and commodities in countries such as Brazil and Chile (more here).


in the bond markets, Spanish and Italian government debt has risen in value this morning.

That’s pushed down the yield on Italy’s 10-year bonds to below 5% for the first time since March.

Italian bonds have been rallying since late July, after Mario Draghi’s declaration that the European Central Bank would do everything in its power to defend the euro.

So even without buying any Italian bonds, the ECB head has already revived confidence in its debt.



Shares in Europe are surging, as the stock markets open for trading.

The FTSE 100 jumped 82 points, hitting 5902, with City traders joining in the general feeling of cheer over America’s third bout of quantitative easing.

All the main indices are higher. Spain’s IBEX rose 2.2%, while the Italian FTSE MIB is up 2.3%

Michael Hewson of CMC Markets, though, advises caution:

It remains unclear whether these new actions will be any more successful than previous ones given that the problem is not a lack of credit, but a lack of demand, notwithstanding the inflationary risks more QE will have on food and fuel prices.

There are also the additional risks that given that Europe could well flare up again Mr Bernanke has pretty much fired his last bullet, given the open ended nature of the purchases.


Asian markets pushed up by QE3

Asian stock markets posted some strong gains today: here’s the details:

South Korea’s Kospi: + 2.9%

Hong Kong’s Hang Seng: + 2.9%

Japan’s Nikkei: + 1.8%

China’s Shanghai Composite: + 0.96%

Investors were cheered by Ben Bernanke’s promise to inject $40bn into the US economy each month. Peter Lai, a director at DBS Vickers in Hong Kong, said:

It shows that the authorities will support the economy, and it gives investors confidence.


Coming up….

Here’s a quick agenda:

Eurozone finance minister meet in Nicosia, Cyprus: all day (and tomorrow)

Press conference in Nicosia: 10.30am BST

Coalition talks in The Hague: ongoing

Spanish house price data: 8am BST / 9am CET

Eurozone inflation data for August: 10am BST / 11am CET


QE3 cheers markets

Good morning, and welcome to our rolling coverage of Europe’s finance crisis, and other key events in the world economy.

First up: last night’s announcement of a third round of US quantitative easing has lit the touchpaper on a global market rally.

Stock markets in Asia are up strongly after Ben Bernanke announced that the Federal Reserve would launch a third push to stimulate the American economy.

European stocks are also expected to bounce when trading begins, on the news that Bernanke will effectively keep throwing money at the US economy until it get better.

Bernanke also warned that the ongoing crisis in Europe continues to threaten the US (and by extension, the rest of the world too).

As reported last night, the latest QE plan is designed to bring down America’s stubbornly high jobless rate. The Fed will buy $40bn of mortgage-backed securities per month, and won’t stop until the unemployment picture improves. Future rate cuts are also expected.

The decision to kick off QE3 really shows quite how worried Bernanke is about the US economy, of course…

Also coming up today: eurozone finance ministers are meeting in Cyprus. They are expected to discuss the question of a bailout for Spain, and the situation in Greece (where coalition leaders are still straining to find cuts demanded by their lenders).

We’ll be watching all the action in Nicosia, as well as other events across the eurozone — including negotiations over the next Dutch government. A centrist coalition between the Liberal and Labour parties still looks likely… © Guardian News & Media Limited 2010

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