Euro reaches new lows on the back of uncertainty
The UK saw a surprise rise in retail sales in October with a 0.6% monthly increase from Septembers figure. Although this was a positive sign for the UK economy it is expected that shoppers would be cautious with their spending for some time yet.
In the Eurozone, a Spanish debt auction produced the highest borrowing costs since 1997. An issue of €3.5B worth of 10 year bonds produced a yield of 6.9%, perilously close to the 7% mark that the markets consider unsustainable. The last Spanish debt auction in October produced yields of around 5.5%, which highlights how spooked the financial world is about the crisis.
An auction of French 4 year bonds saw yields rise to 2.8% from 2.3%. The difference between German and and French yields is now at its widest since the Euro was created in 1999. The ECB was also rumoured to have intervened again to buy up Italian debt on the secondary market. On the back of all this bad news out of the Eurozone, all the major stock markets around the world were down for the fourth consecutive day.
In the US it was a mixed bag on the data front. Building permits came in at an annualised figure of 650k for October, beating the 600k that was predicted. Added to that there was a lowering of the unemployment rate, which came in at 388k, the lowest figure in seven months. However this positive start to the day was tempered by Philly Fed Manufacturing Index of 3.6 which was lower than the 8.7 being predicted. On the whole, data from the US has been relatively good this week, however the fact that stocks have fallen steadily highlights that the main driver in the market is the Eurozone.
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