European bond rates are lower this morning with optimism about a “grand deal” to reduce the threat of financial disaster and a breakup of the Euro currency. The yield on Italian 10-year and 5-year bonds has dropped sharply in the past week. Italy’s Prime Minister Mario Monti announced a fresh package of austerity measures as he works to tame the deficit. Ireland’s Prime Minister made a rare prime time TV broadcast on his government’s deficit cutting plans.
European government leaders meet this Friday for a crucial summit. Major reforms being considered include a stricter fiscal union with budget discipline to be policed by a centralized European authority, a bigger bailout fund for weaker Eurozone nations troubled by debt, and new austerity measures by member states. The leaders of Germany and France meet today, while Treasury Secretary Tim Geithner heads to Europe, as the US urges European leaders to “go big” and agree to sweeping reforms.
The heavy metal rock group Metallica is bringing forward its tour plans to avoid getting sucked into Europe’s debt problems. “Over the next few years, the dollar will be stronger and the Euro will be weaker,” Metallica’s manager, Cliff Burnstein, tells the Wall Street Journal. “I want to take advantage of that by playing more of these shows now, because they will be more profitable.” Metallica will tour Europe next year instead of 2013, as originally planned.
Stock market futures rose this morning with hopes for a new deal to save the Euro. Market averages gained 7 percent last week after falling 5 percent the week before. The roller coaster ride is the result of Europe’s financial crisis, and efforts by the Fed and other central banks to ease the funding crisis for troubled banks.
Another snapshot of the US economy comes today with the release of two surveys. US factory orders are reported by the government, and the Institute for Supply Management – the people who do the buying for American businesses – post the non-manufacturing index for November. This report looks at the services sector – by far the largest part of the economy.
Richard Davies, Business Correspondent, ABC NEWS Radio. twitter.com/daviesabc