In pursuit of European bonds

Europe once again came into the swing

In brief: Interested in buying European bonds began to rise somewhat in the background of the general positive trend.

On Friday, May 14 at the European government bond market initiative, the second consecutive day, owned bulls. Excessive demand for protective assets increased against a background of speculation about the fact that Greece fails to pay their debts. That view, in particular, the head of Deutsche Bank Josef Ackermann, who declared that for the full repayment of its debts, Greece should make “unbelievable effort.” Statement by J. Ackerman served as the impetus for the beginning of active purchases of German and French bonds.

As for the British gilts, the demand for them has started to rise the day before, after the President of the Bank of England Mervyn King has approved plans for the new British Prime Minister David Cameron to reduce the budget deficit. Support for M. King, the new prime minister, which the main task at the moment considers the problem a record-high budget deficit, was perceived by market participants as a signal that the British monetary authorities will not tighten monetary policy and leave the base rate refinance at the current level 0 , 5% for a long period. Demand for debt obligations of European governments also supported the statement by experts of international rating agency Moody’s Investors Service that they are 80% sure that the credit rating of Greece in the next three months will be downgraded. In addition, the Association of financial markets in Europe reported that the central banks stop redemption of bonds, which also stimulated the growth of quotations of bonds. Considerable excitement has caused the publication in the Spanish El Pais, which reported that during the debate about establishing a fund to help countries experiencing the greatest difficulties – EU member states in the amount of 750 billion euros, the French president, Nicolas Sarkozy has expressed his willingness to leave the euro area If Germany’s Chancellor Angela Merkel refuses to provide emergency relief measures in distress Greece.

Thus, the topic of emergency assistance to Greece remains the main factor influencing the formation of the character of the market. Bidders are worried that the measures will not be able to support the world’s financial exchanges. Indeed, the allocation of foreign aid Greece decides only the urgent problem of a single small economy, but the immediate cause of these problems is the mismatch costs and revenues of a number of countries, will not be eliminated. Thus, despite the provision of assistance to Greece and the assurances of the first persons in the willingness of their countries support each other, sovereign risk will remain a significant factor in world financial markets. In general, the problem of public finance in a wide range of serious concern. The crisis has destabilized the budgetary system in many major economies, and until the situation is only getting worse.

Ukrainian Globalist
2010-05-16 13:46, Economics.

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