The Early Vibe

Posted by Nogger - a legend in his own mind at 11:09 | Categorized as

09/11/11 -- Catching my eye this morning is news that yields on Italian 10-year bonds have risen above an unsustainable 7% today. It is surely only a matter of time before they're next up for a bailout whether Berlusconi steps down or not.

The problem there is where's the money for that going to come from? The recent pledge to hike the EU bailout fund to a trillion euros is no more than that, a pledge. It's not like there's actually a trillion euros, or what's left of it, sitting in the European Financial Stability Facility bank account right now is it? What's in there is actually an array of IOU's from the various member nations, including Italy, as far as I can tell.

The FTSE100 is down 1.5% and the German DAX and Paris CAC a little over 2% lower on the news. I'm surprised that they aren't down more than that personally, but the day is yet young.

Elsewhere I read that Chinese pork prices are down for seven weeks in a row rendering pig production there unprofitable with corn prices currently where they are. The fall in pork prices has at least helped Chinese inflation fall from 6.1% in September to 5.5% in October, according to China's Ministry of Commerce.

Nov 11 Paris wheat looks like it's in for another volatile day, it's currently up EUR2.00/tonne at EUR204.75/tonne, but has traded as high as EUR214.00/tonne this morning at one stage, having risen EUR6.75/tonne yesterday. It goes off the board tomorrow and is a massive premium to what will then become the new front month, Jan 12.

The UK has recorded its biggest ever trade deficit (GBP9.8 billion) since records began in September. That's knocked the pound vs the dollar, but we are up above 1.17 against a sick as a parrot euro.

All eyes are on the USDA this afternoon. Will they maintain their appetite for shock? I wouldn't be at all surprised.