Market sentiment was lifted amid hopes that some sorts of European bonds will be issues and China's funding to debt-ridden European countries. Shares in both sides of the Atlantic advanced, in particular, Germany's DAX surged +3.36%. However, not all commodities shared the optimism. While the front-month contract for Brent crude climbed +0.46% after falling over the past 4 days, the equivalent WTI contract slipped as it failed to hold firmly above 90. Investors were disappointed by the weakness in gasoline demand. Gold price fluctuated between gains and losses but ended the day -0.20% lower.
European Commission President Jose Barroso said that the commission will 'soon present options for the introduction of euro bonds' and 'some of these options could be implemented within the terms of the current treaty'. Germany and France have so far rejected joint issuance of Eurobonds. As German Foreign Minister Guido Westerwelle, one 'can't fight debt in Europe by making it easier to take up debt' while a French spokeswoman stated 'mutualization of debt is an arrival point, not a departure point'.
Meanwhile, French President Sarkozy and German Chancellor Merkel reaffirmed, after a conference call with Greece, that they 'are convinced that the future of Greece is in the Eurozone' as Greece showed 'absolute determination' to 'take all necessary measures to put into practice given commitments in its entirety'.
In Asian session today, the RBNZ left the OCR unchanged at 2.5% as New Zealand's economic growth, which relies heavily on exports, may be affected as its trading partners have' deteriorated markedly and New Zealand dollar has appreciated a lot against major currencies. Policymakers signaled a rate hike is still necessary if 'recent global developments have only a mild impact on the New Zealand economy'. In the quarterly MPS, the RBNZ trimmed its growth and inflation forecasts. GDP will grow +3.6% for the year ended March 2012 and +2.6% by March 2013, down from June's projections of +4.4% and +3.6% respectively. CPI is now expected to rise to +2.1% in March 2012 and then ease to +2.0% in March 2013 before soaring to +2.2% in March 2014.
Concerning macroeconomic events for today, the SNB is expected to leave the 3-month Libor target range at 0-0.25%. The meeting statement will mainly reiterate the stance it made on September 6, when the central bank set a minimum target of EUR/CHF at 1.20. In the US, inflation probably eased to +0.2% m/m in August from +0.5% a month ago. The Empire State manufacturing index might have improved to -3.9 in September from -7.7 in August. Initial jobless claims probably dipped -4K t 410K in the week ended September 10.