MidSession Review 20/07/12

Spanish Government bonds yields cleared the 7 mark and are now trading at 7.115 up 1.48%, Italian peers followed the same path, they are now trading at 6.088 up 1.45%. The spike in yields was due to a German newspaper which quoted Gerda Hasselfeldt, a senior member of the Christian Social Union, the sister party to Chancellor Angela Merkel's center-right Christian Democratic Union, who told the Rheinische Post there could be no further renegotiation of Greece's bailout terms.

As soon as the news was published the Eur/$ cross fell 0.3% to 1.2229$, the Stoxx50 fell 1.09% to 2,277.28, German Dax fell 0.41% to 6,730.97, Italian Ftsemib and Spanish Ibex both fell more than 2%.

On the commodity side Oil(Wti) fell 1.24% to  91.51$ and Gold gained 0.11% to 1,582.10$.

From the earnings standpoint:

• Vodafone Group Plc,Europe's largest mobile-phone company, lost 2.9 percent after posting quarterly service sales that trailed forecasts.
• Microsoft Corp reported adjusted earnings and revenue that beat expectations.
• Google Inc's revenue surged 21 percent, easing worries a slumping global economy would take a toll on the company's online advertising.

Investors are now waiting for the the Euro-area Finance Ministers to sign off on the terms of a 100 billion euro bank bailout for Spain.  The conference call is not expected to cover other issues like Greece's 3.1 billion-euro August bond payment or widening spreads in Italy.

It's worth to underline that the rate at which European banks say they see each other lending in euros for three months dropped below the equivalent London interbank offered rate for dollars for the first time since January 2008. Bloomberg reports.

The euro interbank offered rate, or Euribor, was 0.451% today, according to data from the European Banking Federation. Three-month dollar Libor was at 0.4521 percent, data from the British Bankers' Association showed.

Will the S&P be able to offer some sort of relief today?

Let's wait and see, in Europe July derivatives instruments just expired, in US the power of gamma can drive the S&P at its nearest pin point, therefore be careful and do not load your gun if your setup is not complete.

Have a nice day.

Originally posted at www.77sigmatrading.com