• Italian/German 10-yr govt bond yield spread widens to 136bps, widest since EU/IMF rescue plan
  • Spanish/German 10-yr govt bond yield spread widens to 153bps, widest since EU/IMF rescue plan
  • EZ March Industrial Orders +5.2% m/m – (Poll f’cast +2.0%) +19.8% y/y
  • 10-yr German govt bond yield falls to record low at 2.586%
  • UK – Q1 GDP revisionwelcome but output still 5.5% below peak
  • Spanish bill auction at higher rates and lower bid to cover ratio
  • UK Q1 GDP Rvsd up to +0.3% qq, -0.2% yy (Cons +0.3% qq, -0.2% yy), smallest yy decline since q3 2008
  • S. Korea BOK Official says foreign investors’ sales not serious enough yet to take special measure
  • Bank of Korea reportedly sold up to $5bln in Asia today to protect the Won after North Korea “combat mode” comment
  • LIBOR 3-month US Dollar rate at highest level since last July
  • EZ debt restructuring would be painful, but not the end of the world on its own – Bullard
  • Top risk to US is Euro crisis morphs into something bigger; unlikely due to bank guarantees – Bullard

It has been another session of doom and gloom. The market has little confidence at the moment with a flight to safety now back in full swing, just as it was in 2008. EUR/USD, GBP/USD and AUD/USD just keep falling with fresh sellers continuing to enter the fray. Stocks are HARD down with 3% losses today the norm. South/North Korean tension goes through the rook on “combat footing” comment from North Korea. Spanish bank woes grab headlines whilst LIBOR is being closely watched with rumours a plenty about Spanish banks raising funds. Forwards spreads in focus as B/S US Dollars in demand across all curves.

EUR/USD has been under pressure from the NY close after Wall Street lost 1% minutes before their close. There has been no recovery throughout the Asian and European sessions with the pair falling near on 200 points from top to bottom. Major support is seen at last weeks low at 1.2043 but a break here may open the floodgates.

USD/JPY has been under pressure all day falling a big figure with most of those losses coming in the European session when EUR/JPY hit a 9 year low. AUD/JPY got smashed falling around 3.5%.

GBP/USD has held up better than most but is still down over 100 points from its opening high just above 1.44. EUR/GBP selling has been pronounced with the pair down a 70 pips.

AUD/USD found no friends today. The pair has traded a neat 200 pip range after opening at 0.8265. Forwards shifted sharply with the 1-yr going from -331 to -310 in Sydney as players B/S US Dollars in large as they did at the height of the GFC in 2008. AUD/JPY down from 74.50ish to a low of 72.08.

The really big mover of the day however was USD/KRW which went from 1224 to 1277 before the Bank of Korea intervened to the tune of US$5bln to push the pair back to 1250. This of course was on the back of Kim Jong-il comments that put North Korean on a combat footing. This made for great airplay but South Korea remained rather silent all day not wanting to antagonise the “dear leader” any more.

US stock futures were already down 1% before the North Korea comments suggesting hedge fund activity after the NY close.

Asian equities ended sharply lower – Tokyo and Sydney finished down around 3%, Hong Kong down 3.5%, Seoul down 2.8% but off its lows of -4.5%.

European bourses are down around the 3% mark whilst the periphery (eg Spain) are down over 4%.

US futures are just off their lows – Dow -233 points, S&P -29 points.

Gold has been remarkably steady all day around the $1190 mark.

Nymex July oil contract last seen down 3.3%.