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Draghi Takes Center Stage

By Macro and Cheese Market OverviewSep 06, 2012 06:41AM ET
Draghi Takes Center Stage
By Macro and Cheese   |  Sep 06, 2012 06:41AM ET
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Things that can move the US today:
  • Asia mostly up: Japan flat, China +.75%, HK +.35%, SoKo +.38%
  • Australia jobs -8.8k vs +11.7 prior, but unemployment to 5.1% from 5.3%
  • Moody's lowers short-term ratings of Sharp
  • Europe strong: Eurostoxx +1.1%, Dax +1.2%, FTSE +.53%, Spain +1.3%
  • Spanish, French auctions strong; Spain sells EUR 3.5 bio, top of target amt
  • Sweden cuts short rates by 25bp to 1.25%
  • France unemployment 10.2% as expected, up from 10.0%
  • UK house prices -0.4% vs +0.2% expected, -0.7% previous
  • Germany factory orders -4.5% YoY as expected, -7.8% prior

A strong session overnight was driven by successful bond auctions in Spain and France, and of course by expectations that the ECB will fuel the bond-buying fire with measures to be announced later this morning. Most European markets are up around 1%, not bad considering we have been hovering near recent highs for several weeks now, with nothing more than a few very mild pullbacks.

Some technicians will consider this a breakout to the upside (though the DAX, for example, is still 1% from its recent high), and with solid justification, judging by the charts. But at the end of the day, the fate of the rally will be determined by the ECB and how much Draghi can deliver.

Keep in mind that the whole bond-buying program needs to be endorsed by the German parliament next Wednesday. It's hard to handicap the outcome of that one, but members will be under enormous pressure to support the measures, and markets seem to think the outcome will be positive.
Draghi Takes Center Stage

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Draghi Takes Center Stage

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