MidSession Review 09/07/12

European benchmarks traded along the flat line. Stoxx50 gained 0.15% to 2,238.95, German Dax up 0.12% to 6,417.75, ahead of Euro-are finance ministers' meeting whose objective is to follow up the crisis-fighting measures adopted at the EU-Summit on the 29th of June.

We are heading into the meeting with Spanish government bond yields at 7.052, up 1.41% vs friday close, and Italian peers at 6.064 up 0.63%.  Eur/$ cross trades flat at 1.2291$ while Gold and Oil gains respectively 0.36% to 1,584.60$ and 0.49% to 84.86$.

The question the market is asking now is: what is expected  to deliver this meeting? We will try to provide you the possible answer:

1. Banking union. The EU summit decided to establish a single supervisory mechanism for eurozone banks, after which the ESM will be able to recapitalise banks directly. To this end, the EU Commission will present a proposal.  Therefore the meeting will not give any new

2. Spanish bailout. The second key area is the implementation of the Spanish bailout. It has already been said that without the Troika assessment there will be no new steps ahead.

3. Financial backstop. The EU leaders affirmed their commitment to use the EFSF/ESM to stabilise markets using the ECB as an agent.The Eurogroup is expected to reach a decision on the conditions required to trigger the interventions on 9 July.

Expectations are for the meeting to provide more specific guidance on the exact procedure a country asking for support should follow, including the timeline and the decision-making process.

Due to the large number of divergences that are coming out reading the newstape, it will be really tough to reach an agreement and we will see everything postponed to the 20th of July meeting.

Today Alcoa in US will start the second-quarter earning season when it release results after the close of trading today.

So wait for the market to signal an opportunity and jump on it following your plan, and remember trying to anticipate is gambling not trading.

Originally posted at www.77sigmatrading.com