Now that our alliteration assignment is through, we can move on to the underpinnings of the markets on Tuesday. The markets were higher early on, as Spain was able to secure lower interest rates for their debt. More importantly, there has not yet been a finalization by the Troika for the next bout of Greek aid. The Greeks went into the treasury market to raise money by selling bills to meet debt payments. There is a tete-a-tete between Christine Lagarde, the head of the IMF, and Jean-Claude Juncker, Euro Group President. They are arguing over the extension that will be given to the Greeks to meet their austerity goals. Lagarde wants the deadline by 2020, whereas Juncker prefers it to be in 2 years time. Along with the looming concerns over the fiscal cliff, this kept energy prices weaker on Tuesday. The IEA cut its demand forecast for the last quarter of 2012, which also softened the complex. They are further concerned about demand estimates being lowered for 2013, citing the state of the global economy as limiting consumption.
However, the markets were most concerned with any Washington development regarding the fiscal cliff. While we are not sure what will transpire with the meetings in Washington this week, we expect leaks will be inevitable with so many corporate heads in attendance. Trial balloons will be seen floating above the district. It is likely that headlines will be a minefield for both the bulls and the bears.
Natural gas soared to a new high on Tuesday, as the potential for colder weather and a possible nor’easter fattened the bulls.
The expectations for the DOE inventories are as follows: Crude: +1.6 mm; Mogas: +200 kb; dist: -500 kb
- Politics & Government
- Christine Lagarde