ECB President Mario Draghi announced on Thursday that the bank may undertake outright open market operations in an attempt to bring down the premium on the yields of peripheral European government bonds. ECB suggested it would be targeting in particular the short end of the curve. ECB also have indicated a readiness to do further unconventional measures to stimulate the Economic region. S&P have warned that economic risks in Italy have increased as they revise their economic risk score up to 5 from 4 and cut the ratings on 15 Italian institutions.
Across the Atlantic in the US as expected there was no change in interest rates at the FOMC. There was some change in FOMC language as they pledged to provide additional stimulus as needed. The consensus among analysts remains for further QE to be announced in September. On the data front worth a note was that the US ISM Manufacturing was quoted at 49.8 and for the second month to be showing a contraction. Whilst the employment data is not as clear as what some believe as the Unemployment rate has jumped to 8.3% versus a market forecast of 8.2%.
THE WEEK AHEAD
Monday: US Fed Chairman Bernanke Speaks
Tuesday: Italian Industrial Production, Italian Prelim GDP, German Factory Orders, UK Manufacturing Production, UK NIESR GDP Est, US Fed Chairman Bernanke Speaks
Wednesday: UK BOE Inflation Report, German IP, German 10Yr Bond Auction, US Crude Inventories, US 10Yr Bond Auction, China CPI, China PPI
Thursday: China Industrial Production, UK Trade balance, US Trade Balance, US Unemployment Claims
Friday: (Tentative) China Trade Balance, China New Loans, French IP, UK PPI Input, US Import Prices, US Federal Budget Balance