The EU debt situation appears to be on better footing from a market price standpoint this morning. In actuality, another weekend of meetings and public denials has resulted in no hard plan. The cucumber may be the vegetable that forces the EU to act where pervasive debt problems have not. A significant e-coli outbreak in cucumbers has led to 14 deaths and over 400 serious illnesses through Germany and the Netherlands. Spain has been accused of being the source of the outbreak. The Spanish are not happy with the charge. Several Euro countries and Russia are banning the importation of Spanish cukes. The EU system is stressing to the breaking point.
The risk markets are more concerned with looking good for the end of the month. The growth pullback in the US is the key story at home with a host of important data points to show in the short week. After Friday, the end of QE2 will dominate the rates complex flow. Blamed for everything that could possibly go wrong in the world, one would think the suspension of QE would be viewed as a positive. The flood of cash that washed into the front end in April and May has pushed short rates to the floor. The switch from B/S growth to steady state should be reflected in this sector first. As expected to better data should put the T-Bill and LIBOR markets back on the radar.