Daily Archives: May 7, 2010

James Politi

There’s no doubt that today’s jobs figures were strong.

Non-farm payrolls were higher by 290,000 in April, in addition to gains of 121,000 from revisions to the data for February and March. Read more

Recently, Ireland hinted it might skip some debt auctions. Now Portugal has gone further, offering to buy back the remaining €4.6bn of €5.6bn May bonds maturing next Wednesday. (The country bought back €1bn on Monday.)

As well as lowering the cost of debt, the moves are intended to calm markets that are hypervigilant to signs of sovereign debt distress. Both countries are signalling their solvency by using their cash buffers to guard against unusually high cost of debt at current auctions.

Gilts down, sterling down and UK equities down. These things have followed news of a hung parliament in the UK, but there is plenty more bearish news out there to spook the markets. For example: (1) Yesterday’s record 1000-point intraday drop in the Dow, due to a clerical error or some massive sales, depending whom you believe; (2) Fears of further sovereign debt crises in Europe, where equities have been falling for days; and (3) Japan’s decision to inject $21.6bn overnight liquidity — using a crisis-era tool last used (to this extent) in late 2008.

There are eight working days until Greece will need its first tranche of payments. Who’s paying what?

The very bottom row – “Shortfall” – shows the size of the hole in committed funds. Luckily, eurozone politicians must be quite familiar with budgetary gaps by now. Read more

Robin Harding

The Bank of Japan moved to offer Y2,000bn ($21.6bn) in overnight liquidity on Friday to “increase markets’ sense of security” because of turmoil resulting from the debt crisis in Greece. It is the bank’s first exceptional offer of overnight funds since the scare over Dubai’s sovereign debt in December 2009 and its biggest since the height of the financial crisis in December 2008.

The move shows that fears about sovereign debt default in Europe are rippling across global markets, with the Bank of Japan the first central bank to react by adding liquidity. This, however, does not reflect any significant market disruption in Japan or any fears of contagion to Japan, despite its own debt woes. More on ft.com.