The much awaited EU Summit gets going today with one of the participants, Italy, also scheduled to auction off both 5- and 10-year debt. The 2-year auction a couple of days ago saw an average yield of no less than 4.712% with EUR 2.99 billion allotted at a bid to cover of 1.65. In addition to politics and auctions we also have jobless claims from the US, eurozone confidence measures, German unemployment numbers, and GDP from both the UK and US. The latter two, however, are final Q1 reports* and hence we look at claims instead.
- EU Summit (two-day event) to see an implementation of a "growth compact," but what else? Following last year's fiscal compact, the renewed trouble in several eurozone countries has seen policiticans call for a growth compact as a complement to spur economic development in the eurozone area. If this is the only tangible outcome of the summit, we could well see markets be underwhelmed. Angela Merkel has so far made it quite clear that any discussion of shared liability will involve demands for stringent oversight, which is likely too much for "the others" (Club Med) to accept. On the other hand we could see the summit produce some sort of roadmap to a more integrated union, fiscally, banking-wise or both. Find much more on the EU Summit and the outlook for the eurozone in Chief Economist Steen Jakobsen's piece Meeting of Cardinals around the corner?
- Italian 5- and -10-year bond auctions (09:00 GMT): After a steady period following the two 3-year LTROs around New Years, Italian yields have shot back up to 5.9% and 6.2% for 5- and 10-year bonds, respectively. Italy will attempt to auction off up to EUR 3 billion in 2022 bonds at a coupon of 5.5%, which compares with the last such auction on May 30 when Italy sold 2.34 billion at an average yield of 6.03%.
Italian 10-year government bond yield:
- US Initial Jobless Claims (12:30) to stay in the top of the 2012-range? Claims have been rather sticky in the higher end of the 2012-range of late with four consecutive weekly readings above 380,000 after some improvement in May. While still consistent with growth in nonfarm payrolls the steam has clearly gone off the labour market engine to some extent, and claims point towards another weak employment report when the June edition is released come July 6. Consensus looks for Initial Jobless Claims to edge down 2,000 to 385,000 and for Continuing Jobless Claims to shed 19,000 and print 3.28 million compared to a week ago.
