Follow Paul Donovan

Europe tries again (and probably fails)

| Tags: Paul Donovan

  • According to the Financial Times, Italy may have misplaced EUR8bn or so restructuring derivatives. While EUR8bn is not what it was, it is still EUR8bn and comes in the wake of widening spreads for Italian government debt.
  • The EU finance ministers gather together to discuss sorting out a proper banking union for the Euro area. While it I always possible that there is some kind of breakthrough, precedent and the fact that France and Germany seem to have different visions of the Euro would argue against.
  • Brazil has thrown its capital controls into sharp reverse in the past few weeks, in an effort to defend the real. Overnight there were more changes, with the central bank now removing disincentives to short the US dollar. Now all they need to do is find someone who wants to short the US dollar.
  • Final Q1 GDP is due for release from the United States. Although not normally a big focus for markets we are expecting a downward revision to a 2.1% annualised rate. That may generate an impact, given the somewhat hysterical overreaction to anything that hints at changes in Fed policy.
Listen to the audio version of this briefing.