High yield spreads remain stubbornly high despite dramatic interventions from UK and US central banks. Banks are hording cash due to mistrust and fear over who will make the next big write down. Nationwide, the UK's largest building society, put up the rates on some mortgages despite there being a reasonable probability of a rate cut on the 10th of April.
So after the Easter recovery, it looks as though it's business as usual for the credit crunch. Oil and metals were in demand again as traders reverted back to the buy commodities, sell the dollar tactic that has worked so well over the last 12 months. Consequently, the Dollar sold off heavily against the Euro, as speculation mounted that the Fed is not yet done with cutting rates. Cable was not as lucky, mainly due to speculations that the BOE will be cutting rates at their next meeting.
UK financial companies will be listening to BOE governor King's speech today, for any clues of further direct intervention in the mortgage securities market. They will certainly need it is as credit markets start to freeze over again. We haven't seen volatility in equities like this for half a decade, and the bad news is that were still some way off the frantic action we saw at the height of the dot com bubble. There could be some more explosive action this coming week, with some top tier economic announcements due.
So after the Easter recovery, it looks as though it's business as usual for the credit crunch. Oil and metals were in demand again as traders reverted back to the buy commodities, sell the dollar tactic that has worked so well over the last 12 months. Consequently, the Dollar sold off heavily against the Euro, as speculation mounted that the Fed is not yet done with cutting rates. Cable was not as lucky, mainly due to speculations that the BOE will be cutting rates at their next meeting.
UK financial companies will be listening to BOE governor King's speech today, for any clues of further direct intervention in the mortgage securities market. They will certainly need it is as credit markets start to freeze over again. We haven't seen volatility in equities like this for half a decade, and the bad news is that were still some way off the frantic action we saw at the height of the dot com bubble. There could be some more explosive action this coming week, with some top tier economic announcements due.
Tuesday brings a raft of manufacturing data, with UK manufacturing PMI in the morning, and US ISM manufacturing index in the afternoon. Midday on Wednesday will be a turbulent time for European traders, with the release of US ADP Non-farm Employment Change, and Fed Chairman Ben Bernanke speaking. Friday tops the bill with the release of Non-farm payroll change and US employment rates.
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