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Markets  |  July 20, 2012 13:07:23

Spanish property are falling rapidly since the crisis began

It's getting old obehraná song. Start of European trading carries a wave of pessimism and investors are scared, this time mainly due to the further decline of Spanish property (the fastest since the crisis began), and Chancellor Merkel's warning against a number of outstanding euro-issues, which come just two days before an important meeting of the Eurogroup (eurozone finance ministers ). But when the afternoon bell sounded on the New York Stock Exchange, as if magically, banish all concerns and attention moves on to the good performance of U.S. firms.

The positive effect of the U.S. earnings season is nothing new. In the past, but we know that can sweep under the rug major problems for a limited time. These are usually the first fortnight in which odreportují largest U.S. companies. This time may be the joy of America's corporate results is even shorter. It can go wrong mainly referred to Friday's meeting of Euro-groups on which to help fine-tune the details of Spanish banks.

  Open two important questions remain.They want the Germans to the final guarantee for capital assistance to banks carrying Madrid? And they will return to the losses pushed the senior bondholders Spanish banks? Spain has not yet allow a longer period of uncertainty. In addition to the aforementioned decline in real estate record, the latest figures showed a strong decline in bank deposits (for the last month by more than 7 billion euros) and an increase in bad loans. If Friday's agreement with the euro area in Spain important questions disappointed (final guarantee Madrid and bear losses will also have senior bond holders), the Madrid face another dangerous growth in revenues. From this perspective, will have an interesting bond auction today and Spanish investors an eye on the vote on the untying of aid Spain in the German Parliament.Chancellor Merkel, but not leave anything to chance and has recently launched a YouTube campaign to convince the Germans that the money for Madrid is the right thing.


Regional currencies in quiet trading yesterday course, the euro is not able to go above 1.2 EUR / USD

Regional currencies in terms of daily exchange rate changes against the euro yesterday in quiet trading spirit. A partial exception was the forint, which appreciated by more than half a percent in relation to the hopes inserts into negotiations with the IMF Orbánovy government. It will take place in Budapest until the following Wednesday.

During the day very successful zloty, which has signed on weaker-than-expected industrial production data for June. However, the zloty has deleted most of the losses in the afternoon. Interesting in any case will follow the approach of central bankers at the following meeting, scheduled to start in September, because much of the market began to decline again to bet on rates in the three-month term. That is, in our still somewhat premature.

As for the crown, and a few EUR / CZK again yesterday oťukával dvousetdenní average (25.24), which he exhibited so far down the stem. So while it should remain - still believe that the situation in the euro area still outweighs the earnings season in the U.S. (see Introduction) and thus push the crown back on the defensive.

Euro over optimism in the stock market is not able to go above 1.23 EUR / USD. Yesterday he did not like the Spanish numbers or doubtful statements Angela Merkel. When the effect wears off the U.S. earnings season (see editorial), may also lose ground more quickly.We believe further that the currency pair has a short primed for testing two-year lows at 1,188 EUR / USD.


Revenues went up peripherals, today is the Spanish auction

Yields on the outskirts went up altogether. Spanish ten-year yield jumped 16 basis points to 6.87% after a series of weak numbers, while the German two-year bond for the first time experienced the auction with a negative yield.

Although the Greek government yesterday adopted austerity measures totaling 7,5-8 billion euros, but on the achievement of the original 11 billion of planned savings Greeks remain skeptical. Likely to believe that negotiations with the troika (IMF, EC, ECB) next week will reach softening conditions of the original plan. Athens's main argument is likely to be poverty in the country after five years of recession has increased significantly.

Today is the long-awaited Spanish auction in which Madrid will try to sell bonds worth 2-3 billion euros with maturities in the years 2014-2019.


Commodity market yesterday was dominated by oil

Středečnímu developments in commodity markets once again dominated the Brent crude oil, whose price rose above 105 USD / barrel. The media refer to as the reason for profits re-escalating the situation in the Middle East. However, in our opinion not very likely and the main driver of oil prices we consider still more problems with mining in the North Sea. This suggests the fact that most "action" takes place on the short end of the forward curve (ICE).

For other commodities, the greater the loss ascribed gold, the price plunged to 1570 USD / TOZ.

Source: CSOB

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