METRO FINANCE: European Market Update

Forex Fundamental Analysis Reports | Written by Trade The News | Sep 13 07 10:06 GMT |

ECB Monthly Report In Line with Last Month's Report

The European indices are currently trading slightly lower in the session, but are off of their worse levels in a bout of upward momentum. The indices are still trading lower however on fears that the profits will decline as the Euro makes new all time highs against the dollar, and the Dollar makes multi-year lows against the Canadian Dollar.

European government bonds and gilts alike are currently trading lower in the session dropping sharply following ECB comments and poor auction results in the UK. Italy sold €2.5B 5-year 4.00% BTPs with an average yield of 4.12%, and a bid-to-cover of 1.56x. The auction, the fourth for this issue, brings the amount outstanding for this issue to €14.5B. Note that the average bid-to-cover over the past three auction s was 1.51x. Over in the UK the DMO sold £2.25B in 5.25% 2012 bonds with an average yield of 4.989%, and a bid-to-cover of 1.98x. This auction, the third for this issue, brings the amount outstanding on the issue up to £7.75B. The bid-to-cover compares to the 1.46x seen at the last auction. Note that today's auction had a 1.2 bps yield tail, and a 5 tick price tail.