European equities were set for a rough day at the open earlier but have now turned things around on this headline here.
Most regional indices are up over 1% on the day, with US futures also turning things around as broader sentiment improves. S&P 500 futures are now up 0.4%. Elsewhere, bond yields are also jumping with 10-year bund yields now up close to 0.09% after opening at -0.02%. 10-year Treasury yields are also up over 11 bps to 1.86% currently.
This is a big move by the EU to try and finance energy and defence spending in order to cope with the fallout from the Russia-Ukraine war, with the proposal possibly to be presented at an emergency summit later this week on 10-11 March.
The report notes that the details are still being sorted out so everything is rather light at the moment. The market is jumping first and then working out the little nuances later. I fear that there might be some disappointment.
This basically signals a potential energy reform by the EU but it will take time and like all things involving lawmakers, we could see things progress more slowly. It's a good first step but the follow through needs to deliver, otherwise this just ends up being another white elephant project.
