PARIS (MNI) – Total government debt in the Eurozone reached E8.3
trillion in the first quarter of 2012, up more than E111.2 billion from
4Q’s level, while its share of GDP climbed to 88.2% from 4Q’s 87.3%
level, Eurostat said Monday.

Compared to 1Q 2011, government debt was up by more than E355
billion. At that time, the debt-GDP ratio stood at 86.2% – already well
above the theoretical Maastricht ceiling of 60%.

The breakdown of 1Q debt showed currency and deposits of E234.677
billion or 2.8% of GDP, securities other than shares of E6.608 trillion
or 78.3% of GDP, and loans of E1.486 trillion or 17.8% of GDP.

Inter-government lending related to the debt crisis amounted to
E111.026 billion in 1Q or 1.2% of GDP.

Debt-GDP ratios across countries in 1Q ranged from lows of 6.6% in
Estonia and 20.9% in Luxembourg, to highs of 108.5% in Ireland, 111.7%
in Portugal, 123.3% in Italy and 132.4% in Greece.

The European Commission expects the Eurozone debt ratio to climb
to 91.8% this year and to 92.6% next year. The projections were revised
up this spring to take account of downward revisions to GDP forecasts.

Yield spreads among peripheral countries with large debt or
deficits rose to near record levels early Monday as market worries about
a possible Greek Eurozone exit and about the ability of Italy and Spain
to continue to fund themselves increased.

The Spain 10-year spread vs Bunds soared to 637 basis points, while
the Italian bond yield spread climbed to 525 basis points.

– Paris bureau: +331 4271 5540; email: paris@marketnews.com –

[TOPICS: MT$$$$,M$X$$$,MGX$$$]

EMU DATA: 1Q govt debt E8.3 trillion, 88.2%/GDP; 4Q11 87.3%; 1Q11 86.2%
– See MNI MainWire for details

Up from 87.3% at end of Q4 2011  

Greek govt debt falls to 132.4% from 165.3% (hooray)

Spain govt debt rises to 72.1%  from 68.5% (boooo)

Italy govt debt rises to 123.3% from 120.1% (boooo)

Apparently there is barrier option interest at 1.2075 in EUR/USD,  as well as the aforementioned 1.2050 and 1.2000.

Sell orders clustered 1.2140/50 as mentioned earlier, with buy stops gathering around 1.2160.

UPDATE:  JUST BEEN TOLD SOME BUY STOPS THROUGH 1.2120 AS WELL.

‘Could 2012 be the year when this bull run ends’

I was going to put this article up first thing when gold was trading at $1577.

It’s now at $1569!!

Oh-eh missus

• Italy 5 year credit default swaps up 29 bps at 555 bps
• French 5 year credit default swaps up 12 bps at 182 bps
• Irish 5 year credit default swaps up 20 bps at 580 bps

Reuters reporting.

EUR/USD sits at 1.2100, off a mere 15 pips from what greeted me first thing.  Eeerily quiet really given all that’s going on.

Guess it must be…………Monday!!!

• Solution to current problem is more cuts, more reforms, new mechanisms to integrate euro zone

–Adds Press Report That Many EMU States Also Oppose Further Aid

BERLIN (MNI) – The International Monetary Fund has signaled that it
will not contribute to further financial aid for Greece, raising a
greater risk of insolvency in September, the German weekly Der Spiegel
reported Sunday.

According to the magazine, high-ranking IMF officials have already
informed the EU leadership of its intentions.

It is already clear that Greece won’t be able to meet the target of
cutting its debt to 120% of GDP by 2020, Der Spiegel wrote. Granting
Greece more time to meet its budget consolidation goals would require
E10-50 billion in additional aid, according to estimates by the troika –
the EU Commission, the ECB and the IMF, the magazine said.

German daily Sueddeutsche Zeitung reported Monday that Germany and
many other Eurozone member states are also not willing to grant Greece
additional financial aid. German Chancellor Angela Merkel is not
prepared to ask parliament to approve more aid for Greece, the paper
cited government sources as saying.

The risk of Greece leaving the Eurozone is now seen as manageable,
Der Spiegel said. In order to avoid a contagion effect, Eurozone
governments want to wait until Europe’s permanent rescue fund ESM is in
operation. A first ruling by the German Constitutional Court on the ESM
is scheduled for September 12.

In the meantime, the ECB might bridge the gap, Der Spiegel wrote.
On August 20, Greece needs to pay back some E3.8 billion to the central
bank. Athens might sell that amount of T-bills to Greek banks, which
could then use the bonds as collateral with the ECB.

German Economics Minister Philipp Roesler told German ARD public
television in an interview aired Sunday that Greece will most likely not
be able to meet the goals agreed with its international lenders. “I want
to say this here very clearly: if Greece does not meet its obligations,
there can be no further payments to Greece,” he stressed.

In that case, Greece might come to the conclusion that it would be
better to leave the Eurozone, said Roesler, who is also vice chancellor
and head of the free market-orientated FDP, the junior partner in the
government coalition. “I think that for many experts, for the FDP, and
for me, a Greek exit from the Eurozone has long since lost its horror,”
he added.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

[TOPICS: M$X$$$,MGX$$$,M$$CR$,M$G$$$,M$Y$$$,MFX$$$,MT$$$$]

According to the German newspaper Merkel won’t ask German parliament to approve additional aid for Greece, citing anonymous government officials.

The officials say it is unthinkable the Chancellor will go before parliament to seek a third aid program.

And to be honest, who could blame her?

• Will take decisive action against excessive, speculative forex moves

Am I the only person who believes them?

Bout time!!

Thought all euro zone officialdom had been struck mute this morning.

• ECB needs tools to contain country risk perception
• ECB needs tools to restore control of countries’ financing costs
• European banking union particularly urgent

Hard to disagree with any of that.

• Japan watching currency markets
• Japan ready to take decisive action if needed
• Japan ready to act on excessively volatile moves
• Japan ready to act on speculative fx moves

I’d label the moves in EUR/JPY “abrupt”,  bordering “excessively volatile” and definitely “speculative”

So, LET’S SEE WHAT YA GOT!!

Make that 7.55%

FRANKFURT (MNI) – A U.S. unemployment rate stuck at 8.2% and
“pretty significant” downside risks to the economic growth outlook
stemming from the ongoing Eurozone debt crisis “would argue for further
action” on the part of the U.S. Federal Reserve, San Francisco Fed
President John Williams told the Financial Times.

Williams, however, stopped short in calling for direct action from
the Fed. “I think the argument against further action is the question of
uncertainty around the effects, the costs and the benefits of doing so,”
he said in an interview posted online Sunday.

Should the Fed decide to embark on a new round of quantitative
easing, Williams suggested that purchases of mortgage-backed securities
rather than Treasuries would be more effective.

“There’s a lot more you can buy without interfering with market
function and you maybe get a little more bang for the buck,” the FT
quoted Williams as saying.

Williams also noted the benefits of an open-ended QE program, which
could be adjusted as needed, depending on economic conditions. “The main
benefit from my point of view is it will get the markets to stop
focusing on the terminal date and also focusing on ‘Oh, are they going
to do QE3?,’” he said.

– Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com –

[TOPICS: MT$$$$,M$$CR$,MMUFE$]

EUR/CHF sits at 1.2006.

As one reader has just said “SNB must be working very hard today.”  Yes indeedy!!

Talk has it that there has been very decent interest to buy 1.1700 EUR/CHF 3 month puts.

Some obviously think the SNB may have to abandon the peg real soon.

Was 2.5321% when I arrived.

USD/JPY barrier interest at 78.00 confined to the annals of history.

EUR/USD been as low as 1.2085, presently 1.2090.

Barrier option interest 1.2050.

The Italian paper is reporting main Italian parties supporting Monti’s government may agree on a new election law, and move toward an early election possibly as soon as November.

Meanwhile Italian 10 year government bond yield up 7 bps at 6.24%, highest since June 28.

Euro-era record.

Just plain nasty