JGBs were trading higher heading into the EU session, gaining from political concerns surrounding Greece. (RANsquawk)
According to the BoJ minutes from their April 9-10th policy meeting, the board shows it is particularly important for the central bank to quickly produce visible results by achieving a 1% inflation rate. The minutes further show that the government expects the bank to make the utmost efforts in monetary policy while cooperating with government measures to overcome deflation swiftly. (Sources)
T-notes settled in positive territory on Friday, with 10y yields hitting a 3 month low. Fears over the strength of the US economy sent investors sprawling for US paper, as the headline NFP figure disappointed investors. The risk off tone could add an interesting twist to next week's Treasury debt auctions, which will see US government debt post a seventh consecutive weekly gain, the longest streak since the financial crisis. At the pit close, t-notes settled at 132.20, up 14 ticks. Finally, the DJIA finished at 13035.24, down 1.30%; the SPX finished at 1368.89, down 1.63% and the NDX finished at 2637.92, down 2.47%. For the week, the DJIA finished down 1.46%; the SPX finished down 2.46%; and the NASDAQ composite finished down 3.67%. T-notes were trading sharply higher at 133.0+ up 13 ticks heading into the European session, following the concerns surrounding the elections over the weekend in Europe. (RANsquawk)
Fed's Williams said when the time comes to exit Fed's zero-interest policy, the first step would be to use 'communications', though the day for this is, in his opinion, still a long way off. (Sources) The Fed official also said that he is increasingly hopeful that US recovery is "self-sustaining", though if Europe went into severe recession, it could threaten the US economy enough to prompt QE3.
François Hollande grabbed victory in the French presidential election on Sunday, defeating Nicolas Sarkozy. Hollande had taken 51.7 per cent with three-quarters of the vote counted, becoming the first French socialist President since 1995. (FT-More)
Greek voters deserted traditional governing parties in droves at elections on Sunday, putting the country's future in the euro zone at risk, according to an early projection by the Interior Ministry. (Sources) The projection, confirming a pattern in earlier exit polls, showed the two parties supporting an EU/IMF bailout that is keeping Greece from bankruptcy would struggle to form a workable coalition government. The Greek conservative leader Samaras has said the New Democracy is the only pillar of stability in Greece, adding that they are ready to establish a coalition government, extending the invite to all pro-European parties. The government will aim to keep Greece within the Eurozone and will aim to 'modify' bailout policies to bring growth.
Officials from the EU and the IMF have said that Greece must adhere strictly to its austerity program, including taking new measures in June, signaling that there was little room for a new Greek government to renegotiate the country's bailout terms. (Sources)
EU's Rehn signals end of 'Merkozy' austerity drive. (Telegraph/FT-More) The EU's top economic official has called for a new European investment pact, in the latest sign Brussels is preparing to reconcile Angela Merkel's austerity drive with the growth agenda of French presidential favourite François Hollande. Rehn called for additional spending for large-scale infrastructure projects, arguing that there is not sufficient private-sector demand to create jobs.
German Chancellor Merkel and her government, fearful over resistance in Germany, have made it clear in recent weeks that they would not soften their austerity demands, no matter who won the French presidency. (WSJ) According to reports the German opposition party, the Greens, want Chancellor Merkel to delay parliament's decision on the EU fiscal pact. (Sources/Spiegel)
German finance minister Schaeuble has backed wage increases for German workers in what may be seen as an olive branch to critics who argue that weak German consumption has exacerbated the Eurozone crisis. (FT-More)
Italy is going to propose to the EU that they should exempt borrowing used to pay their commercial obligations from their calculation of public debt. The report also said Monti is also going to propose exempting the counting of public debt used for investments. (Sources)
Initial polling result forecasts for the German state of Schleswig-Holstein elections show the following distribution of seats: CDU: 22, SPD: 22, Greens 10, FDP: 6, Pirates 6, SSW: 3. The most stable majority (44 seats) would have a grand coalition of the Merkel CDU and opposition SPD parties. (FT Deutschland)
At the end of March, ten of Europe's biggest banks had parked a total of USD 1.2trl in cash at central banks across the world, according to WSJ analysis. (WSJ) The figure is 12% higher than in December and 66% higher than the end of 2010.
Wolfgang Munchau writes that the only plausible solution to the Eurozone crisis is a combination of the use of two instruments; debt monetisation through the ECB and default into the ESM. (FT-More)
CFTC said the net EUR short position was USD 17.7bln, a decrease of 5% from the previous week; net JPY short position USD 7.9bln, decrease of 9%; net CHF short position USD 2.0bln, decrease of 14%; net USD long position USD 12.7bln, decrease of 33%. (Sources)
Australian AiG Performance of Construction Index (Apr) M/M 34.9 (Prev. 36.2)
Australian NAB Business Conditions (Apr) M/M 0 (Prev. 4, Rev. 3)
Australian NAB Business Confidence (Apr) M/M 4 (Prev. 3)
Australian Retail Sales SA (Apr) M/M 0.9% vs. Exp. 0.2% (Prev. 0.2%, Rev. 0.3%) (Sources)
Iran has transferred nuclear weapon-making installations to secret Dasht e-Kavir (Great Salt Desert) sites, including nuclear-capable ballistic missile plants. (DEBKAfile)
Israeli PM Netanyahu has called for early general elections in September, a year ahead of schedule, to ensure "political stability". (Al Jazeera)
U.S. Secretary of State Clinton will use a two-day visit to India this week to urge further reductions in Indian imports of Iranian oil. (Associated Press)
WTI crude futures were seen trading down USD 1.48 at USD 97.05, following the stronger USD overnight benefiting from risk-averse flows due to political uncertainty in Europe. Last price taken at 0635BST. (RANsquawk)
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