EU economic commissioner Almunia is quoted by Reuters as saying spreads between various EU bond markets are exaggerated at the moment. The issuance of an EU bond is not viable now because of market conditions but says a common bond is a good idea nonetheless.
One of the great weaknesses of the euro as an alternative to the dollar is 16 separate bond markets with a variety of credit profiles rather than one federal market in the US.
Risk aversion has raised its ugly head once again as Treasury yields continue to slide and and stocks reverse early gains. Don’t expect the market to embrace risk aggressively until a US bank bailout and mortgage modification plan is fully enacted.
EUR/USD has pulled back to 1.2870 while EUR/JPY is lower at 116.25.