Special post…
The U.S. stock market is set for a bloody open on Tuesday. At the time of this writing U.S. equity futures are down significantly with the S&P 500 futures down 2.7%. Dow futures will place the Dow Industrial Average at market open well below the 10,000 threshold.
At this moment I am seeing significant liquidation events taking place, and the global currency markets are in a state of complete disarray. Some dealer chatter currently centers around Spain, with a rumor circulating that a major bank in Spain has needed to borrow short term funding from the government. Additionally, other chatter surrounds Spanish hedge funds may be in trouble.
Also of note is the just announced Spanish bill auction results:
SPAIN DEBT AGENCY (TESORO) 3-MONTH AND 6-MONTH BILL AUCTION RESULTS
- Sells €1.06B in 3-month Bills, avg yield 0.645% v 0.549% prior; Bid-to-cover: 3.14X x v 3.3x prior
- Sells €2B in 6-month Bills, avg yield 1.26% v 0.736% prior; Bid-to-cover: 1.91X v 2.12x prior
The 6 month bill auction saw the average yield nearly double from the prior auction on growing economic concerns in Spain.
The European economic concerns have pushed the Euro further downward. The EUR/JPY has dropped to a 9 1/2 year low; lowest reading since November 2001.
Markets in Asia were also hit hard in the overnight session:
- Nikkei 225 Index -3.1% at 9,459
- Hang Seng Index -3.5% at 18,985
- Australia S&P ASX200 -3.0% at 4,265
- Shanghai Composite Index -1.9% at 2,622
S&P 500 futures are currently near a critical short term support level of 1040, which is the February 2010 lows.
