Here we are, just at the point where it looked as though an end-game for Europe was beginning to play out. In return for tough budget rules, including a change in the EU treaty, the ECB would support the bond markets….
A funny thing happened on the way to a resolution: Several unnamed EU states pushed back.
Tinkering with EU Treaties is a daunting task as recent history has shown. Eventually, changes are rammed through, but it is rarely an easy process.
On the fundamental side of the equation, the market appears quite pleased with Italy’s austerity moves. Yields on Italian debt have plunged another 50 bp today to 6.24%, more than 100 bp below their recent peaks.
Despite that improvement, EUR/USD remains mired in ranges awaiting ISM data later this morning.