Papandreou will cut spending with about.6 billion euro, or about 12 per cent of Greek gdp. The measures include tax rises, lay offs in public sector and wage cuts. Today the parliament faces a further vote to secure fast-track implementation of the measures. If the Greeks also say yes to this, Greece can probably receive further payments under a 110 billion euro bail out put in place last year. The eu finance ministers will discuss this on Sunday. However, it does also seem clear that Greece needs another bail out to deal with its debt burden. Eu wants private investors to participate in a possible new emergency loan.
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But note that pretty robust rises in production will be needed in may and June for growth to match Q1s.1 per cent quarterly gain this quarter. But sales declining business sentiment and the strong euro indicate that some underlying slowdown is also probably taking place. With tighter fiscal and monetary policy likely to ensure that domestic demand expands modestly at best over the coming quarters, the recovery in the wider economy may soon be over. In, norway the news has to a large intent turned on floods and rainy weather. The positive side has been increasing water reservoirs. From reservoir levels at all-time lows in March and early April, the levels are now more than fifty per cent of full capacity and above the 15-years median level. Spot electricity prices are declining and this will contribute to further declines in the over all inflation rate. The Greek parliament yesterday supported new, tough austerity measures for the Greek economy. The market reactions were positive. Stock markets rose, treasury yields climbed and the euro strengthened yesterday. The Greek prime minister, papandreou, yesterday got the needed support for new, tough austerity measures for the Greek economy.
The bigger monthly rise in core prices is a concern but a lot of it was probably due to temporary factors that could be reversed in the next few months. The.1 per cent m/m increase. Us industrial production shredder in may was better than expected. Production was held back by.8 per cent m/m dip in utilities output, as the unseasonably cool weather meant that fewer people needed the air conditioning. Manufacturing output increased by a solid.4 per cent m/m. Production of motor vehicles and parts fell in may as well as in April but we should now see motor vehicle output rebounding from June onwards. The.2 per cent monthly rise. Aprils euro-zone industrial production was broadly in line with expectations, following unchanged production in March. The recent slowdown may partly reflect disruption to global supply chains caused by the japanese earthquake, perhaps suggesting that growth could bounce back in the months ahead.
The detail of the survey was just as disconcerting as the headline, with the new orders, shipments and employment indices all deteriorating sharply. The.3 per cent the m/m increase. Us core consumer prices in may was the biggest monthly gain in five years and illustrates why the fed is unlikely to actuate another round of quantitative easing in response to the recent signs of slower economic growth. The annual rate of core inflation.5 per cent is still below the fed's implicit 2 per cent target. The beige book also reported that used cars were in short supply and that prices on cars and parts had increased. These supply problems are mostly due to the japan-related disruptions to production. Those disruptions are now beginning to ease and we wouldn't be surprised to see prices fall back in the third quarter, as vehicle inventory starts to swell again.
To.7 per cent. But also other markets were affected. Euro fell.6 per cent versus the. Dollar from yesterday morning, and. Stocks slide the most in more then two weeks. Long-term Treasury yields fell substantially. Nok was down.8 per cent versus the euro, on increased volatility and falling oil prices. Posted another weak round of data yesterday. Empire, state manufacturing index slumped to -7.8 in June, from.9, illustrating the extent of the economic slowdown.
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Contributed to lower Euro, declining. Stocks and lower long term Treasury yields. By kyrre aamdal, senior Economist at dnb markets. Yesterday large demonstrations and protests took place outside the Greek parliament. The parliament discussed the government's proposed austerity measures. The government's austerity plan, with eur 78bn budget cuts over english five year and state-asset sales did not get support in the parliament, and even party allies turned against the government.
The Prime minister, george papandreou will thus reshuffle the cabinet and seek a confidence vote today. George papaconstantinou, who shepherded Greece's eur 110bn bailout last year, is now under attach and will likely be replaced. Lucas Papademos is touted as a substitute. He is a former ecb vice president and adviser to the prime minister. The political turmoil sent yields on Greek sovereign debt further. The yield on two-year Greek notes exceeded 28 per cent for the first time and rates look on 10-year bonds increased.
Michigan consumer confidence index released on Friday was no exception. The index fell from.0 in may.8 in June. Consensus had expected an outcome.0. . The decline is probably due to falling stock markets, weak housing markets and the weak development in the labour market. Dnb markets own, macroScore underline this impression that the economic development has been poorer lately. In may we made 14 downward revisions.
This month twelve indicators were revised down. Only to indicators were revised. Our total Macroscore has, as a result, fallen from.3 in April to -0.125 in June. This suggests growth somewhat below trend. (0 trend) Norway still has the highest score, followed by Sweden and the emu. China, usa, uk and Japan all have negative scores. The turmoil surrounding Greek debt problems and weak data set from the.
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George papaconstantinou, who has had the position estate until now, will move to the environment ministry. Papaconstantinou is the one who handled negotiations with eu and imf about the eur 110 billion presentation rescue deal last year and he is also known as "the brain" behind the already implemented austerity measures. The foreign, interior, labour and justice minsters were also replaced. Papandreou hopes that the new cabinet will gain more support than the prior and that they as a result will manage to agree on a new set of austerity measures. The parliament is currently discussing Papandreous' austerity measures. Papandreou yesterday urged the politicians to approve his plans and to support his new cabinet. If he fails, eu has made it clear that no new aid will be released. Another factor that has weighed on the market lately is fears regarding a slowing global economic recovery. In general key figures have disappointed lately and the.
austerity measures. Greece has large debt maturities in July and urgently needs the money to avoid a default. In the meantime the Greek prime minister, george papandreou, is working intensively to try to get new austerity measures to be approved by the Greek parliament. The package includes a radical privatization plan agreed with the eu and imf. The opposition against Papandreous and his plans has increased lately, both within the Greek public and within his own party. As a result, papandreou has reshuffled his cabinet. Former defence minister, evangelos Venizelos, will become the new finance minister. Venizelos is known as one of the heavy weights in the ruling party.
However ecb has opposed any such agreement that are not completely voluntary from the investor's side. France has supported ecbs view. It does now however seem like germany year is about to soften their stance on this issue. After a meeting with Germany's Angela merkel and France's Nicolas Sarkozy on Friday, merkel said Germany wants private investors to contribute in a deal, but that such participation should be voluntary. One large hurdle towards a new Greek bail out deal does, thus, now seem to be out of the way. Merkel and Sarkozy also said they were hoping to reach an agreement for Greece as soon as possible. Yesterday evening it was however known that.
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The Greek debt situation is still gender very much in focus. Yesterday evening it was known that Europe delays a decision on new emergency loans to Greece. The next payment of the existing rescue package is also delayed. In the meantime the Greek prime minister is working intensively to try to get new austerity measures to be approved by the Greek parliament. By camilla viland, Analyst at dnb markets. The Greek debt crisis is still in focus. Previously germany has demanded that private holders of Greek bonds must carry some of the costs connected with a new Greek rescue deal.