Markets continued to slump amid reports of very disturbing “stress tests”

[RTFX-Trading]

Markets continued to slump amid reports of very disturbing “stress tests”

What’s new?
Japan: Yen reached monthly high against the Euro
Metals: Gold ups to $890 an ounce
United States: the U.S. Treasury does not have the results of the "stress test"
Crude Oil: Fell of 9% on the day

Today:
08:00 DE: Mar PPI M/M exp -0.30%, previous -0.50%
10:30 GB: Mar CPI M/M exp 0.20%, previous 0.90%
10:30 GB: Mar RPI M/M exp -0.20%, previous 0.60%
10:30 GB: Mar RPI-X M/M exp 0.10%, previous 1.00%
11:00 DE : Apr ZEW Current Index exp -90.0, previous  -89.4
14:30 CA: Feb Wholesale Trade M/M exp 1.40% previous -4.20%
15:00 CA: BOC Rate Decision
16:00 US: Speech from US Treasury Secretary Geithner
 
 
Overnight Rates and Indices:

EURUSD:  1.2954 – 1.2897.
USDCHF:  1.1711 – 1.1675.
GBPUSD:  1.4575 – 1.4468.
EURCHF: 1.5128 – 1-5100.
USDJPY:  98.45 – 97.73.
DowJones:  7'842 -3.56%.
NASDAQ:  1'309 -3.29%.
S&P 500: 832 -4.28%.
Nikkei:  8'714 -2.36%.
Crude Oil: $46 +0.17%
Gold: $886 +0.19%.

Comments:

The price of crude ended on a sharp decline of 9% yesterday, following the decline in U.S. equity markets due to concern by the economic situation. Shares of Bank of America slipped by 16%, Citigroup has plunged 17%. Investors are concerned about the sharp rise in bad debts.

The news that has cast doubt on the stock market is the "stress test" result. According to a U.S. radio blog, the report mentions that 16 of 19 large U.S. banks are "technically insolvent" and adds that if 2 of these 16 banks were to go bankrupt, they would absorb the remaining funding guarantees of the FDIC (Federal Deposit Insurance Corp. or agency guarantee bank deposits in the United States). The U.S. Treasury has responded to this stating that it has no knowledge of resistance tests (stress test) of the first 19 banks in the country. The spokesman for the U.S. Treasury said that the results of these tests will be published May 4th.
 
The decrease in grants encouraged the market to take refuge in safe haven currencies, traders focused on the dollar, anticipating a faster exit from the crisis in the United States than in other regions of the world. The current instability also pushed the market to sell the "carry trades" and position itself to increase the value on another refuge: gold. The euro is suffering from its side of market uncertainties regarding the future strategy of the European Central Bank. Its chairman said the ECB could lower interest rates by 25 basis points, but others responsible for the ECB said they did not want the REFI rate below 1%.

Nicolas Longchamp
RTFX Ltd
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