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| Eurozone crisis live: Dutch pass bond auction test | |
| (40 minutes later) | |
| 9.23am: Steve Collins, global head of dealing at London & Capital Asset Management, confirms that investors flocked to this morning's Dutch debt auction (details at 9.13am). | |
| On Twitter, Collins cited market talk that the auction closed in just two minutes (much faster than usual), encouraging traders to sell 'safe-haven' German bunds. | |
| Hearing the Dutch book has closed after 2 minutes , rather than the usual 15 minutes as extremely well subscribed, thus the Bund selloff | |
| — Steve Collins (@TradeDesk_Steve) April 24, 2012 | |
| 9.13am: The results of the Dutch debt auction are in! And at first glance, it looks like a success | |
| In fact, the auction closed within a few minutes - quicker than expected - as investors raced to get their bids in. | |
| The Dutch State Treasury Agency has sold €1.995bn of bonds - bang in the middle of its target of €1.5bn to €2.5bn of debt. | |
| This includes exactly €1bn of two-year bonds, at an average yield (the interst rate on the debt) of 0.523%. That's actually lower than the last auction of this type, according to Bloomberg. | |
| It also found buyers for €0.995 of 25-year bonds at an average yield of 2.782%. | |
| The immediate reaction in the markets is positive -- Dutch sovereign debt strengthened slightly. | |
| Mike van Dulken of Accendo Markets said the auction has passed "without fuss". | |
| Phew. | |
| 9.07am: While waiting for the Dutch debt auction results, there's an entertaining column in the Financial Times today by Kenneth Rogoff, Harvard University's professor of economics, in which he compares the eurozone to a young couple who set up with a joint bank account before getting married. | |
| The experiment goes well, so they each invite a sibling. Then the problems start... | |
| Eventually, the quartet decides that dinners will be even more fun, and the bank will give them an even better deal, if they expand the arrangement. So the siblings persuade a few cousins to join. Pretty soon, their phones are ringing off the hook with family members they have not seen in years. Cousin Kendra, a marginally employed chef with precarious finances, is nevertheless welcomed in hopes she will employ her culinary skills to enrich group meals. | |
| My favourite line is about "first cousin Nigel", who irritates everyone by living "just across the river yet insists on managing his own finances" (yup, that's us, British readers). | |
| Worth a read (if the FT paywall allows you). | |
| 8.52am: I must confess this is the first time that I've been eagerly awaiting the results of a Dutch debt auction since the eurozone crisis began. | 8.52am: I must confess this is the first time that I've been eagerly awaiting the results of a Dutch debt auction since the eurozone crisis began. |
| Reuters journalist Jamie McGeever agrees that it is unusual for the Dutch State Treasury Agency to be in the spotlight: | Reuters journalist Jamie McGeever agrees that it is unusual for the Dutch State Treasury Agency to be in the spotlight: |
| netherlands sells up to €2.5 bln of bonds today. unprecedented attention on a dutch sale after govt collapse. | netherlands sells up to €2.5 bln of bonds today. unprecedented attention on a dutch sale after govt collapse. |
| — Jamie McGeever (@ReutersJamie) April 24, 2012 | — Jamie McGeever (@ReutersJamie) April 24, 2012 |
| The auction starts at 9am BST (10am Dutch time), with the results due within an hour. In the meantime, here's more analyst comment, this time from Investec's Brian Barry: | The auction starts at 9am BST (10am Dutch time), with the results due within an hour. In the meantime, here's more analyst comment, this time from Investec's Brian Barry: |
| The auction will be a litmus test as to demand for their paper given the impending election... if there's a marked increase (in yields) then we'll know investors are getting a bit more worried. | The auction will be a litmus test as to demand for their paper given the impending election... if there's a marked increase (in yields) then we'll know investors are getting a bit more worried. |
| 8.32am: Economist Nouriel Roubini has claimed this morning that Europe's new fiscal rules are 'dead on arrival' even before they've come into effect. He tweeted this morning that yesterday's events (the political crisis in the Netherlands, and the results of the first round of the French presidential election) mean the rules are already unravelling: | 8.32am: Economist Nouriel Roubini has claimed this morning that Europe's new fiscal rules are 'dead on arrival' even before they've come into effect. He tweeted this morning that yesterday's events (the political crisis in the Netherlands, and the results of the first round of the French presidential election) mean the rules are already unravelling: |
| EZ Fiscal Compact DOA even before ratification. So much for credible/binding fiscal rules during a severe recession that make it more severe | EZ Fiscal Compact DOA even before ratification. So much for credible/binding fiscal rules during a severe recession that make it more severe |
| — Nouriel Roubini (@Nouriel) April 24, 2012 | — Nouriel Roubini (@Nouriel) April 24, 2012 |
| François Hollande, the socialist leader who won the first round of France's elections, blamed Europe's austerity drive for the popularity of the far-right National Front leader Marine Le Pen. | |
| Speaking in Brittany last night, Hollande said: | Speaking in Brittany last night, Hollande said: |
| It's this austerity everywhere that brings desperation to people and leads them to vote for the far-right. | It's this austerity everywhere that brings desperation to people and leads them to vote for the far-right. |
| 8.20am: European stock markets have risen in early trading, but it's a muted recovery after yesterday's heavy losses (in which the German DAX lost over 3%, and the FTSE 100 nearly 2%). Here's the details: | 8.20am: European stock markets have risen in early trading, but it's a muted recovery after yesterday's heavy losses (in which the German DAX lost over 3%, and the FTSE 100 nearly 2%). Here's the details: |
| FTSE 100: up 19 points at 5685, + 0.35% DAX: up 45 points at 6568, + 0.7% French CAC: up 15 points at 3114, + 0.5% Dutch AEX: up 1.34 points at 302. 61, + 0.44% | FTSE 100: up 19 points at 5685, + 0.35% DAX: up 45 points at 6568, + 0.7% French CAC: up 15 points at 3114, + 0.5% Dutch AEX: up 1.34 points at 302. 61, + 0.44% |
| 8.08am: City analysts predict that this morning's Dutch debt auction could show that investors are more nervous about lending to the Netherlands, following the government's collapse on Monday. | 8.08am: City analysts predict that this morning's Dutch debt auction could show that investors are more nervous about lending to the Netherlands, following the government's collapse on Monday. |
| Tthe auction of up to €2.5bn of two types of bonds (one maturing in 2014, the other in 2037), begins at 9am BST, with results expected before 10am. | Tthe auction of up to €2.5bn of two types of bonds (one maturing in 2014, the other in 2037), begins at 9am BST, with results expected before 10am. |
| Michael Hewson of CMC Markets predicted that the Dutch authorities may have to agree higher borrowing costs than at previous auctions of this type of debt (am looking for old data on this now....) | Michael Hewson of CMC Markets predicted that the Dutch authorities may have to agree higher borrowing costs than at previous auctions of this type of debt (am looking for old data on this now....) |
| While the two issues look likely to get away, the yield on the issuance could well be higher, given the sharp rise in yields seen yesterday. Yields shot up not only on Dutch bonds but on Spanish, Italian and French 10 year bonds as well. | While the two issues look likely to get away, the yield on the issuance could well be higher, given the sharp rise in yields seen yesterday. Yields shot up not only on Dutch bonds but on Spanish, Italian and French 10 year bonds as well. |
| And Ransquawk, the financial news service, said: | And Ransquawk, the financial news service, said: |
| Today's results could show a dent in demand following the resignation of the country's cabinet yesterday, bringing expectations of a new vote to be held in September, putting its prized triple-A rating in jeopardy and causing the spread between the Dutch 10yr and its German counterpart to widen 28.5% during yesterday's session. | Today's results could show a dent in demand following the resignation of the country's cabinet yesterday, bringing expectations of a new vote to be held in September, putting its prized triple-A rating in jeopardy and causing the spread between the Dutch 10yr and its German counterpart to widen 28.5% during yesterday's session. |
| 7.55am: The collapse of the Dutch government on Monday over its austerity budget puts the country's triple-A credit rating at risk. | 7.55am: The collapse of the Dutch government on Monday over its austerity budget puts the country's triple-A credit rating at risk. |
| Overnight, Moody's warned that the crisis was "credit negative", but said it was maintaining its current rating of AAA with a stable outlook. | Overnight, Moody's warned that the crisis was "credit negative", but said it was maintaining its current rating of AAA with a stable outlook. |
| Here are some highlights from the Moody's statement: | Here are some highlights from the Moody's statement: |
| This development is clearly credit-negative for the Dutch sovereign given that it generates both political and policy uncertainty....Having said that, the Netherlands is entering this testing period from a position of relative strength. | This development is clearly credit-negative for the Dutch sovereign given that it generates both political and policy uncertainty....Having said that, the Netherlands is entering this testing period from a position of relative strength. |
| Moody's predicted political instability in the Netherlands for the rest of 2012, and also warned that the collapse of Mark Rutte's government also threatens Europe's drive for closer, tighter, fiscal unity: | Moody's predicted political instability in the Netherlands for the rest of 2012, and also warned that the collapse of Mark Rutte's government also threatens Europe's drive for closer, tighter, fiscal unity: |
| As one of the euro area's main proponents of rules-based fiscal discipline and monitoring, a Dutch failure to abide by these rules could weaken proposed euro area rules at their birth. | As one of the euro area's main proponents of rules-based fiscal discipline and monitoring, a Dutch failure to abide by these rules could weaken proposed euro area rules at their birth. |
| In other interesting credit rating agency news overnight, Standard & Poor's has cut its outlook on Argentina's B rating from stable to negative, following its controversial nationalisation of energy firm YPF. Here's the statement | In other interesting credit rating agency news overnight, Standard & Poor's has cut its outlook on Argentina's B rating from stable to negative, following its controversial nationalisation of energy firm YPF. Here's the statement |
| 7.54am: Here's today's agenda: | 7.54am: Here's today's agenda: |
| • Dutch bond auction (up to €2.5bn of 2 and 25-year bonds): from 9am BST / 10am CEST • UK public sector borrowing data for March: 9.30am BST • Spanish bond auction (3+6 month bills): 9.40am BST / 10.40am CEST • Italian debt auction: morning • Mark Rutte addresses parliament in The Hague: 1pm BST / 2pm CEST | • Dutch bond auction (up to €2.5bn of 2 and 25-year bonds): from 9am BST / 10am CEST • UK public sector borrowing data for March: 9.30am BST • Spanish bond auction (3+6 month bills): 9.40am BST / 10.40am CEST • Italian debt auction: morning • Mark Rutte addresses parliament in The Hague: 1pm BST / 2pm CEST |
| Another interesting event today -- I believe the governor of the Bank of Greece is due to deliver his annual assessment of the Greek economy (just looking for more details on this now). | Another interesting event today -- I believe the governor of the Bank of Greece is due to deliver his annual assessment of the Greek economy (just looking for more details on this now). |
| 7.45am: Good morning, and welcome to today's rolling coverage of the eurozone financial crisis. | 7.45am: Good morning, and welcome to today's rolling coverage of the eurozone financial crisis. |
| The political crisis in the Netherlands continues today. Mark Rutte is due to address parliament in The Hague this afternoon, where politicians are wrestling with the question of how to agree a budget for 2013. | The political crisis in the Netherlands continues today. Mark Rutte is due to address parliament in The Hague this afternoon, where politicians are wrestling with the question of how to agree a budget for 2013. |
| Rutte's dramatic resignation yesterday continues to dominate the agenda – although European stock markets are expected to post a small recovery after Monday's selloff. | Rutte's dramatic resignation yesterday continues to dominate the agenda – although European stock markets are expected to post a small recovery after Monday's selloff. |
| The Dutch must also test the support of the financial markets this morning, with an auction of up to €2.5bn of debt (in two year and 25-year bonds). Spain and Italy are also selling government bonds today. | The Dutch must also test the support of the financial markets this morning, with an auction of up to €2.5bn of debt (in two year and 25-year bonds). Spain and Italy are also selling government bonds today. |
| And in the UK, new borrowing figures will show whether George Osborne hit his deficit target for 2011. | And in the UK, new borrowing figures will show whether George Osborne hit his deficit target for 2011. |