NEWS / Foreign Exchange

Euro-Zone PPI rises in line wtih expectations in February

- In a relatively quiet session the European indices are currently trading higher led higher as increased merger and acquisition speculation circulates. The commodities stocks are trading higher as oil and metals prices climb.

- European government bonds opened lower today after JGBs were lower in Asian trading. EGBs continue to trade in negative territory in the session, but are currently off of their worst levels. The UK DMO sold ??2.0B in 4.25% 2046 gilts with an average yield of 4.268%% and a bid-to-cover of 1.37. The neutral bid-to-cover was called at 1.69; the previous bid-to-cover was 1.56. There was a 1.8 basis point tail on the auction.

- As expected Swiss CPI for the month of March declined to 0.1% m/m, and rose to 0.2% y/y. Swiss CPI rose from its lowest level in nearly three years as oil prices rose.

- Spanish net unemployment declined by 15.8K in March compared to a decline of 7.2K in February. Spanish unemployment declined as economic growth prompted employers to boost hiring.

- February PPI in the Euro-Zone rose to 0.3% m/m in line with analysts??™ expectations; PPI rose to 2.9% y/y, above estimates of 2.8%. The rise in PPI was led by a jump in oil prices.

- Construction PMI in the UK rose to 58.9 in March, above estimates of 57.3.

- The ECB??™s Liebscher reiterated much of the recent ECB rhetoric overnight. Liebscher said that monetary policy is accommodative and that rates are low. Liebscher said that economic developments are positive for growth, noting that the ECB must watch all future developments. Furthermore the Liebscher said that the impact of the VAT hike was not as big as initially feared.

- The UK??™s Tony Blair said overnight that the UK may take a rougher stance on the Iranian situation. Blair said that it is time for Iran to respond, noting that the next two days are critical in resolving the Iranian hostage standoff.