Courtesy of John Nyaradi.
Global storm clouds darken with Fed’s growth estimates, China slowdown and Spain debt
After yesterday’s Federal Reserve meeting, markets took little solace in the extension of Operation Twist and overnight more bad news hit global markets.
The Fed downgraded growth estimates to 1.9%-2.4% from previous estimates of 2.4-2.9% as they announced more long term bond buying through the end of the year.
In Asia, HSBC reported China’s PMI at 48.1, well below the 50 level that separates expansion from economic contraction.
In Europe, Spain went to the open market with 2 Billion in Euros and sold more than planned but at significantly higher yields from previous sales. Two year bond yields doubled while 10 year yields dropped slightly to just below the critical 7% level at 6.6%.
In Greece, the new government appears to be pressing ahead with plans to renegotiate its deal with Europe while Europe digs in against this idea.
German Chancellor Angela Merkel says no again to buying sovereign bonds while French President Hollande thinks buying bonds is a good idea to keep yields at affordable rates.
More meetings are going to be held this week in Europe as leaders continue efforts to get in front of this fast moving crisis.
The Eurodollar (NYSEARCA:FXE) declined overnight to $1.2666 while Asian indexes dropped with the Shanghai Composite (NYSEARCA:FXI) declining 1.4% and Hong Kong down 1.3%.
European stocks declined with Spain under pressure over its bond sales and the Ibex (NYSEARCA:EWP) declining.
Germany’s DAX (NYSEARCA:EWG) was off 0.35% at mid-day in Germany while S&P 500 (NYSEARCA:SPY) futures pointed to a lower open on Wall Street.
Oil (NYSEARCA:USO) dropped to near $80/bbl.
Bottom line: Global growth continues to slow, Europe remains in trouble and seemingly unable to get a grip on its debt crisis. Global storm clouds darken.
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