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Stocks Fall as Euro Hits Four-Month Low; Italy Bonds Drop

*from www.bloomberg.com, Mar. 27, 2013 (To view original article click here.)

Take Away #1: Stocks fell and the euro weakened to a four-month low against the dollar, while Treasuries rallied and Italian and Spanish bonds slumped over concerns about Europe’s debt crisis.

Key Facts and Figures:

  • After rising within two points od a record yesterday, the S&P 500 Index slipped 0.2% today at 12:18 p.m. in New York.
  • The Stoxx Europe 600 Index slid 0.4%.
  • The euro fell below $1.28 for the first time since November.
  • The pound erased gains versus the dollar as a report confirmed U.K. GDP shrank in the fourth quarter.
  • Brazil’s real halted a six-day slump as the central bank took steps to stem the currency’s slide.
  • Italy’s 10-year bond yield rose 18 basis points to 4.75%.

Take Away #2: Concerns over Europe’s debt crisis continue to grow and existing home purchases decline for February.

Key Facts and Figures:

  • The leader of Italy’s Democratic Party ruled out the possibility of a broad coalition government.
  • Cyprus prepared to publish details of capital controls it will apply to prevent deposit flight when banks reopen after being shut for almost two weeks.
  • Fewer Americans signed contracts to purchase previously owned homes in February as limited inventory and access to credit held back a more robust housing recovery.

Take Away #3: U.S. stocks decline with financial firms helping to lead the losses.

Key Facts and Figures:

  • JPMorgan Chase & Co. and Citigroup paced declines.
  • Cliffs Natural Resources Inc. tumbled 15% after a downgrade from Morgan Stanley.
  • Dollar General Corp. slumped 1.9% after it said 30 million shares will be sold in a secondary offering.

Take Away #4: The U.S. economy faces heavy burden form federal spending cuts and tax increases and the coming months could be a significant indicator of future recovery prospects.

Key Facts and Figures:

  • “Over the next three-to-six months, if the U.S. economy continues to show signs of improvement that will be very, very important,” said Federal Reserve Bank of New York President William C. Dudley.
  • The fiscal drag is at its most intense point today. If the economy can sort of power through that, I would actually think the second half of the year and 2014 would be better, said Dudley.

Take Away #5: The European markets see declines.

Key Facts and Figures:

  • Financial, telecommunications and automobile companies led losses as the Stoxx 600 erased an earlier advance.
  • TDC A/S retreated 1.6% as the Danish phone operator’s private equity owner put a 6.8% stake on sale.
  • Safran SA dropped 1.2% as France sold about 13 million shares.
  • Mediaset SpA rallied 5.8% after reporting sales for 2012 that beat analysts’ estimates and said that it won’t pay a dividend for the first time.

Take Away #6: The bailout in Cyprus that imposes levies on bank deposits is tailor-made for the country’s situation and is not a template for other nations, said representatives of the euro-area finance ministries.

Key Facts and Figures:

  • The statement falls in contrast to the impression given by Dutch Finance Minister Jeroen Dijsselbloem.
  • Dijsselbloem’s remarks spurred concern deposits in other nations may be vulnerable to similar so-called bail-ins.
  • Banks in Portugal, Spain, and Italy may come under funding pressure after the Cyprus rescue.

Take Away #7: The precedent set by Cyprus and the political uncertainty in Italy mean that risk premia in the euro region will continue to go wider.

Key Facts and Figures:

  • The euro weakened against 15 of its 16 major peers and traded below its 200-day moving average for the third day against the dollar.
  • The pound dropped 0.3% to $1.5115 and GDP fell 0.3%.
  • Sweden’s krona strengthened for a third day against the euro, appreciating 0.3%, as consumer confidence rose more than estimated and retail sales jumped in February.

Take Away #8: European bonds see declines as yields rise.

Key Facts and Figures:

  • Italian five-year yields climbed as much as 21 basis points, the most in a month to 3.55%.
  • Italian 10-year yields extended their first quarterly increase since June as demand fell when the Treasury sold 6.91 billion euros ($8.84 billion) of debt at an auction today.
  • Spanish bonds fell pushing the 10-year yield up 14 basis points to 5.07%.
  • 10-year German bunds fell seven basis points to 1.28% as investors sought Europe’s safest fixed-income assets.
  • Spain revised its first estimate of its 2012 budget deficit, showing the budget shortfall was 6.98% of GDP last year instead of the previously estimated 6.74%.
  • The cost of insuring against losses on senior European bank bonds climbed for the ninth day with the Market iTraxx Financial Index climbing 12 basis points to 202.
  • Sweden’s krona strengthened for a third day against the euro, appreciating 0.3%, as consumer confidence rose more than estimated and retail sales jumped in February.

Take Away #9: U.S. government securities rose for the third day. Gold and other commodities advance as well.

Key Facts and Figures:

  • Treasury 10-year note yields slid six basis points to 1.85%, after touching 1.83%, the lowest since March 4.
  • Natural gas, gas oil, and line cattle climbed at least 1% to pace gains among commodities in the S&P GSCI Index.
  • Hogs, lead, and coffee led declines.
  • Gold for immediate delivery reversed earlier losses to climb 0.5% to $1,605.10 an ounce.
  • Silver declined 0.5%.
  • West Texas Intermediate oil slipped 0.3% to $96.08 a barrel, the first decline in four days.

Take Away #10: Emerging markets rally.

Key Facts and Figures:

  • The MSCI Emerging Markets Index added 0.2% for a third straight gain.
  • The Philippine Stock Exchange Index rallied 2.7% to a record after Fitch Ratings gave the country its first investment-grade debt rating.
  • The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong increased 1% as Chinese banks reported lower bad-loan ratios.
  • Brazil’s real rose after the central bank announced an offering of foreign-exchange swaps to limit the currency’s decline.
  • The real appreciated 0.2% to 2.0134 against the dollar.
  • The central bank announced an auction of 20,000 currency swap contracts in the first offering of its kind since Jan. 28.

*To view original article from www.bloomberg.com click here.

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