Atlanta, GA 5/14/12 (StreetBeat) -- Stocks were mostly weak in Asian trade. The Hang Seng was among the worst with a decline of 1.1%, and Shanghai fell 0.6%. But the Nikkei and Australia both went against the crowd with gains of a quarter percent. European indexes are on the defensive this morning, with the Dax and Footsie both off by two percent, but Greece is off by almost six percent and Spain is down about three percent. US stock futures are down by three quarters of a percent as I write.
*Greek talks between the leaders of the political parties and the country’s President Karolos Papoulias do not appear to have made progress over the weekend and will continue today. The possibility that Greece is going to leave the euro zone looms over the talks; in regards to this the rating agency Fitch says that, among other problems, the threat of a euro exit by Greece has the worst implications for Iberian and Italian corporate debt, which would likely see significant downgrades.
*German state election results in North Rhine Westphalia went against Chancellor Merkel in a big way. Her party, the CDU, suffered its worst post war defeat in the country’s largest state (almost a quarter of the population); the CDU took only 26.3% of the vote, which was down eight points from the previous election there and thirteen points in back of the front running Social Democrats on Sunday. Merkel had campaigned in the state in nine of the last twenty-seven days, but was soundly beaten for the second week in a row in state elections; the result in Schleswig-Hostein last week was the worst for her party in fifty years in that state. National elections are not set to be held until next year, but clearly Merkel is weakened; she says however that the election results will not impact her Euro policies.
*Italian debt sales are said to be relatively successful; they sold all of the paper they wanted to with maturities out to 2025, but the rates were high and Italian debt is joining other peripherals with rates that are even higher in the post auction trade; Spain 10 Year yields for instance are out thirty basis points on the day at 6.26%. Not going higher is the German Bund which set a new record low this morning at just below 1.44%.
*The April reading of Germany’s Wholesale Price Index is +0.5% on a month on month basis; it was +0.9% in March.
*The April reading of Switzerland’s Producer and Import Prices was down 0.1% on the month and -2.3% on a year on year basis; the annualized rate has been negative for the last twelve months.
*The Fed is scheduled to buy Treasuries today that are due to mature between 5/15/18 and 2/15/20; the results of the operation will be announced just after 10:00am CDT.