- Contagion extends into US session driving down stocks, bond yields and euro pairs
- Belgian FinMin Reynders: May be September before second Greek bailout in place
- German FinMin downplays talk of doubling European bailout facility
- Italian banker: We are under speculative attack
- Italian bank stocks hammered; BTP spread over bunds breaks above 300 bp; Italy;s credit default swaps price rise over 25%
- Greece misses deficit target for H1 2011 by a mere 23%
- Obama meets with lawmakers after no deal concluded Sunday evening; Senate Rep leader calls meeting “constructive” ; will meet again Tuesday
- BOE’s King: Inflation will fall toward target over next two years
- Bini-Smaghi: Italy and Greece rich countries; able to pay back debts
- S&P 500 closes down 1.8% to 1319
- US 10-year note yield falls 10 bp to 2.92%
- Oil falls 1.20 to $95.00; gold rises $11 to $1555
EUR/USD was hammered during the European and US sessions as contagion fears intensified toward Italy, with Italian banks especially a focus. Perhaps Mr. Market knows more about this Friday’s stress tests than we do…European banking shares were down about 6% as a group today. EUR/USD fell as low as 1.3986, holding just above the May lows of 1.3968. Rebounds were limited to 1.4050. More sellers are seen at 1.4080/90.
USD/JPY was dragged lower by EUR/JPY sales as well as a tumble in US yields. 80.11 was the PM low in USD/JPY while 112. 35 was the US low in the cross.
EUR/CHF fell to fresh record lows of 1.1672, the lone currency port in a raging storm.
GBP/USD fell to test the 61.8% at 1.5885 and stabilized just above 1.5900 late in the day.
