European releases overnight:
February Forecast Actual
Euro-zone Unemployment Rate 7.1% 7.1% March
Swiss SVME PMI 60.0 55.3
Italian Manufacturing PMI (F) 50.2 49.4
French Manufacturing PMI (F) 52.0 51.9
German Manufacturing PMI (F) 54.9 55.1
Euro-zone Manufacturing PMI (F) 52.0 52.0
German Unemployment Rate 7.9% 7.8%
German Unemployment Change - 45K - 55K
U.K. Manufacturing PMI 51.0 51.3
Numbers from Europe were mixed. The manufacturing PMI numbers saw general softening with the exception of Germany which brought a flat number in the Euro-zone overall. The decline in the Swiss PMI was rather drastic while in the U.K. there still seems to be a degree of stability.
Indeed, banks are fully aware of risks as Deutsche wrote down EUR 2.5bn of losses in loans and asset backed securities for Q1. They are also slashing the value of leveraged-buyout and commercial real-estate loans and residential mortgage-backed securities. This came on the back of UBS announcing a massive writedown of US$37bn resulting from the subprime – the largest writedown of any bank. If any broad generalization can be made then it is that industry remains very nervous, aware of the tighter credit conditions that maintain a vulnerability to sudden shocks to the system while banks are clearly sweeping the decks to reduce exposure. It is easy for Noyer to suggest that banks are too afraid of liquidity risk and that they should be less restrictive in lending to the market but the first prudent measures to such a situation are to reduce exposure until the full extent of the crisis are known. Even central banks acknowledge that present conditions are likely to remain for some while to come. The fact that Deutsche is reducing the value of leveraged-buyout risk is merely recognizing that this is where the next risk lies. Ironically though, the act of limiting exposure to LBO’s will be a likely catalyst for that next crisis to occur.
States releases overnight:
February Forecast Actual
U.S. Construction Spending (MoM) - 1.0% - 0.3% March
U.S. ISM Manufacturing 47.5 48.6 Modestly good news yet again from the States with the ISM Manufacturing and construction spending stronger than expected. It extends the string of good news – or more accurately “less bad news than expected” – to ease the immediate fears of a total meltdown. Just one day after the market was baying for the Dollar’s blood it certainly provided the impetus for the Dollar to recover and break towards the highs seen last week. The small dose of reality from Deutsche and UBS also helped curb the perception that Europe is somehow immune to the general market conditions. Even Dollar-Yen managed to join in with the general clamor to reduce Dollar short positions and of course aided by the doom and gloom brought by the Tankan Report earlier in the day. Certainly it should extend its gains over the remainder of the week to reach the 1.5340 support in the Euro and probably make new highs against the Pound, Swissie and Yen.
More later once the daily analysis has been done…
There following releases are due from Asia due today: Japan March Monetary Base (YoY) +0.1% (prior) | 
