Daily Market Commentary for September 16, 2011
The U.S. markets ended the trading session on a positive note - for the fifth straight session gain. (read more at Millennium-Traders.Com) http://www.millennium-traders.com/news/newscommentary.aspx
U.S. Treasury Secretary Timothy Geithner joined finance ministers in Europe to discuss the debt crisis that brings the threat of a default by debt-stricken Greece. The group of finance ministers and Geithner said it would decide next month whether Greece would get its next round of financial aid. Geithner urged euro-zone finance ministers and the European Central Bank to work together to solve the region’s debt crisis and to enhance the power of the region’s rescue fund amid signs officials have yet to overcome divisions over how to proceed. Geithner told reporters on the sidelines of the meeting of European finance ministers in Wroclaw, Poland, that divisions between the ECB and European governments were particularly damaging and that officials must avoid 'loose talk' abut dismantling euro institutions. “What is very damaging is not just seeing the divisiveness in the debate over strategy in Europe but the ongoing conflict between countries and the central bank,” Geithner said. “Governments and central banks need to take out the catastrophic risks to markets.” Repeatedly, the Frankfurt-based ECB and euro-zone governments have clashed over solutions to the debt crisis. The ECB strongly resisted calls to make private-sector bondholders share in the cost of bailouts. The ECB and Germany have sniped over the central bank’s controversial bond-buying program. Geithner is the first U.S. Treasury Secretary to attend an informal meeting of euro-zone finance ministers, a move that economists say underscores rising international worries over Europe’s sovereign debt crisis and fears it could spark a global financial crisis. Geithner reportedly urged ministers to consider using leverage to boost the firepower of the region’s 440 billion euro ($607 billion) European Financial Stability Facility or EFSF. Luxembourg Prime Minister Jean-Claude Juncker declined to discuss details of the conversation with Geithner during a news conference but said there was 'no discussion of an increase or expansion of the EFSF with a non-member of the euro area'. A spat triggered by Finland’s demand for collateral from Greece in return for Helsinki’s participation in a second bailout program has raised tensions. Finnish Finance Minister Jutta Urpilainen said there was still no resolution of the country’s call for guarantees to back its contribution to the second Greek rescue package. Juncker told reporters some progress had been made on the issue and that ministers agreed that 'if collateral will be provided, it will be done at an appropriate price'. Juncker additionally said a decision on whether to disburse the next tranche of aid for Greece under last year’s EU-International Monetary Fund bailout will be made in October. Per Greek officials, Greece’s government could run out of money within weeks if the tranche isn’t released. Finance ministers welcomed new efforts by Greece designed to help it meet fiscal targets tied to the initial bailout. Fears of an imminent Greek default have created chaos in financial markets and triggered fears of a potentially catastrophic banking collapse in Europe. All 27 European Union finance ministers were set to meet this afternoon into Saturday. Economists anticipae lack of concrete measures could leave markets vulnerable on Monday.
Treasury prices turned higher today, sending 10-year yields down for the first day in five sessions, as U.S. stocks pared the day’s gains as the euro came under pressure. It is anticipated that treasury prices may trade in a tight range over the next few sessions ahead of the Federal Reserve’s policy meeting next week.
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