Tallahassee, FL 11/21/11 (StreetBeat) --*Stocks were generally lower in Asian trade. The Hang Seng fell 1.4%, the Nikkei and Australia both lost about one third of a percent, while Shanghai was off by a slight fraction. European indexes are weak this morning, with the Dax off about 2.7% and the Footsie down two percent. US stock futures are lower by about one and a half percent as I write.*The October reading of Japan’s Merchandise Trade Balance showed a larger than expected seasonally adjusted deficit of Y457.9 billion, more than four times the deficit seen the month before. Exports were down 3.7% from a year earlier, but Imports were up 17.9% from last year.
*The Spanish election over the weekend saw the conservative Popular Party, led by Mariano Rajoy, put an end to eight years of Socialist government. The Popular Party won 186 seats out of the 350 seat lower house of Parliament. The Socialists lost 59 seats in the lower house and now have 110 seats. Prime Minister Rajoy had hoped the markets would give his party more than a half hour to straighten things out; he didn’t get much more than that as 10 Year Yields are up sixteen basis points today at 6.48% and the spread to Germany is thirty basis points wider this morning.
*In its Weekly Credit Outlook, Moody’s commented on France; “Elevated borrowing costs persisting for an period would amplify the fiscal challenges the French government faces amid a deteriorating growth outlook, with negative credit implications.” Moody’s did not have anything to say about a report in the newspaper Le Figaro that the French AAA rating is at risk. The Ten Year yield spread between France and Germany is wider by about a dozen basis points today, trading just above 160 basis points.
*Reports in the Financial Times and elsewhere say the European Commission has a study examining options for euro area governments to issue some debt collectively, including a strategy that would make euro area countries liable for each other’s debt or some other variation of euro bonds.
*The Congressional Super Committee does not appear to have come to any compromise deal on cutting the budget deficit in front of Wednesday’s deadline. Had they come up with something they would likely have a bill ready to go to the House today.
*The October reading of the Chicago Fed National Activity Index is due out at 7:30am CST; it is expected to be +0.19, up from -0.22 in September.
*The October reading of Existing Home Sales is due out at 9:00am CST; it is forecast to be an annualized rate of 4.80 million units, or down 2.2% from the month before.
*The Fed is scheduled to sell Treasuries today that are due to mature between 2/29/12 and 7/31/12; the results of the operation will be announced just after 10:00am CST.
*The Treasury plans to sell $35 billion 2 Year Notes today; the auction results will be announced just after noon CST.
*Atlanta Fed boss Lockhart is scheduled to speak about the economy in Sao Paulo, Brazil at 1:30pm CST.
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