By ForexMansion.com
European periphery yields continue to remain under pressure in the aftermath of the results of Ireland’s bank stress test and continued uncertainty over Portugal. Increasingly severe capital market conditions bring forward the risk of a technical liquidity default, which will put increased pressure on the EU’s liquidity backstop facilities.
The stress tests conducted on four Irish banks showed a €24 billion capital gap, which is within the €35 billion buffer earmarked under the government’s EU/IMF program . As part of the restructuring, Irish banks must sell €72.6 billion of loans by 2013 in order to shrink their balance sheet and reduce the aggregate loan to deposit ratio to 122.5%. The plan is to avoid a fire sale and keep the de-leveraging losses to €13.2 billion, as estimated by the Irish central bank.
Portugal, unable to negotiate an assistance package with the EU/IMF until a new government is in place, plans to hold a €1.5 billion auction for 2012 bonds. Portugal said Thursday it missed its 2010 budget-deficit goal and has been forced to revise previous-year figures, a blow to market confidence in the country’s fiscal management.
Despite the issues on the periphery, the Euro continued to climb, as investors prepare for next week’s ECB meeting, where the central bank is expected to raise rates (Thursday 1145 GMT). EMU PPI on Monday will also give further insight into the inflation picture (900 GMT.
US Nonfarm payrolls rose by 216,000 in March as the private-sector added 230,000 jobs, according to the Labor Department. Economists surveyed s had forecast payrolls would rise by 195,000.The February number was revised upward by 2,000 to an increase of 194,000 jobs, from a previous estimated gain of 192,000. The unemployment rate, edged lower to 8.8% last month, the lowest level since March 2009. Analysts had estimated that the rate would remain unchanged at 8.9%.
Private-sector employment, which account for about 70% of the work force, added 230,000 jobs in March. The Department of Labor’s number of private sector was in-line with the ADP employment report on private sector employment released early this week on Wednesday. The February number was revised upward to show a 240,000 gain. The government sector lost nearly 14,000 jobs in March.
Average hourly earnings of all employees were unchanged at $22.87. Over the past year, earnings have increased by 1.7%. The average workweek for all employees on private payrolls was unchanged at 34.3 hours in March.
Additionally, manufacturing in the US, continues to impress, expressing an economy that is expanding. The ISM’s manufacturing purchasing managers’ index slipped slightly to 61.2 in March from 61.4 in February. Economists surveyed expected the March PMI to fall to 61.0. The expansionary ISM report should ease some worries that the U.S. economy lost steam in March, dragged down by higher energy prices and consumer pessimism. The most alarming index was the prices paid index which rose in March to 85.0 from 82.0.
Originally posted here
