Sovereign Debt Talks Update and More
As we start the week, there is incremental progress from the weekend sovereign debt talks in the EU; an outline cites proposals that include an increase to a rescue fund led by the ECB (with lending or by raising money), no restructuring of Greek debt (which could result in losses for bondholders), and continued pressure on Italy to reduce expenditures. Ireland is now viewed as the guidepost, having come a long way in its restructuring including maintaining competitive corporate tax rates, and exports to the UK. However, the UK's influence in an EU solution is tempered, as it is not an EU member and appears (by members) as to be over-stepping with commentary. This morning MF Global is of the view UK and Swiss banks will not experience recapitalization, and should be net beneficiaries. EU summit discussions continue on October 26, and if progress continues, reduced choppiness in global equities could result.
In the U.S., Q3 earnings reports remain prevalent, with today's announced Caterpillar results closely watched as a barometer for global construction -- earnings beat forecast and the stock is up 4% in pre-trade value. U.S. Jobs legislation will be a focus this week, as well as the jobless rate.
The Yen is at a historical high, and other currencies are higher as are gold and commodities.