The euro remained steady its early morning rise on false information.
All eyes and ears will be on tomorrow’s meeting of the EU where they will be discussing leveraging the European Financial Stability Facility. By using leverage the EFSF can increase their lending ability many times over. Leveraging is a tool used by Forex and Option traders, who use small amounts of the portfolio to purchase large amounts of currency, commodities and options. It is a good tool when used wisely, it also allows for much larger losses.
The hopes of global investors are at least a firm plan and a course of action by the EU and a meeting of the minds so to speak between French President Sarkozy and Chancellor Merkel. These two have been at odds over risk and growth. The pair has taken on the role of leadership in the past many months, but have recently been at odds, which has upset economists and investors. With the turmoil throughout the EU, leadership and command are required. Plans of Action are needed, guidance and stability are required.
The markets today were up on the good news from the US and the chance that tomorrow’s meeting will finally have some firm directions for the Eurozone.
Economic news from the US continues to reflect an improvement in the economy. Early results on Cyber Monday, the day dedicated to internet holiday shopping, the counterpart to Black Friday show great promise for incredible results.
The disturbing report release by the OECD the Organization for Economic Cooperation and Development might really upset the markets tomorrow.
The growth figures for the US were positive and give some hope that it might be the US that is the locomotive with the power to pull the global economy back from the edge. Just a few months ago, we were hoping that Germany might be the driving force, but that is not the case. The new report released paints a bleak picture for Europe and the United Kingdom. The report predicted rising unemployment in the UK, with the jobless rate increasing from 8.1% in 2011 to 9.1% by 2013 even as the economy recovers. For the UK, the OECD’s predictions are a 0.03% contraction in growth this quarter and a further 0.15% next. And the eurozone would shrink in the fourth quarter by 1% and by 0.4% in the first quarter of 2012.
The overall report was bleak with the US and Japan showing some positive results.
Overnight, investors and economists, traders and politicians will begin to digest and factor in this report which might have some negative effects on the markets.
The worrisome news today was the treasurys, rates continued to rise. Yields on the 10-year note added 14 basis points to 2.03%, touching a high of 2.08%. A single basis point equals 1/100th of a percentage point. Watch the markets closely for clues tomorrow.