SCOREBOARD: European spotfires

Looks to me like most markets have opted to digest things a bit. Take stock and see how events unfold. Greece still doesn't have a functioning government after all, and from my understating of things, these discussions have really only just started. It looks, at this stage, that New Democracy will be able to form a coalition though and even the Democratic Left, who had opposed reform, said they will support a coalition in the interest of strong government.

But the Greek election was so yesterday's news and while most markets were treading water, that isn't to say there weren't some big moves. Notable mentions include Spanish bonds, yields of which hit new highs last night – the 10-year yield spiking to 7.2 per cent from about 6.8 per cent. Italian yields weren't too far behind, the 10-year yield shooting up 16 basis points to 5.98 per cent before easing off to 5.9 per cent – still up some 8 basis points though. This was partly the result of data that came out showing a rise in bad debts and specifically, the Spanish central bank reported that loans three months overdue rose to 8.72 per cent in April compared to 8.34 per cent in March. Watch out for a Spanish bills auction tonight to see how demand for their debt is going.

Euro was hit pretty hard as well, falling about 125 pips to 1.2573 and then crude was off 1 per cent to $83, apparently because of Europe. Although that doesn't quite make sense as European crude demand is usually very stable (even through periods of recession – or boom).

Over in equity land moves were mixed. European stocks were all over the place, despite the excitement over Spanish and Italian bonds – and the big move on euro. So Dax was up 0.3 per cent, the CaC fell 0.7 per cent and the FTSE was 0.2 per cent higher. Over in the US, it was a similar story the S&P (up 0.1 per cent to 1344) and Dow (down 0.2 per cent to 12741) were either side of zero but the Nasdaq managed a solid session rising 0.8 per cent (2895) with shares like Facebook and Groupon having a solid session – all stocks-specific stuff. Not that stock-specific stuff was all good mind you. For instance, there is some concern about Fed Ex earnings due tonight, with recent data showing a 9 per cent drop in international freight. Otherwise it's all about Europe.

Conversely, moves on US treasuries were less confused although it is truly confusing why anyone would buy them. The yield on the 10-year was down another 5 basis points or so to 1.5757 per cent, the 5-year yield fell about 2 basis points to 0.68 per cent, while the 2-year was little changed at 0.28 per cent.

Other than that, the Australian dollar managed to stay around the 1.0116 mark and is little changed from 1630 AEST yesterday, having hit a low of 1.0063 overnight. Sterling is then at 1.5667 and yen is at 79.11. In terms of data there really wasn't much. In the US the NAHB housing market index was out and showed a 1 point lift to 29 from 28. But that was it.

So looking at the day ahead there isn't much either. At 1130 AEST we get the RBA's minutes, but recent events have overtaken the discussion at this meeting. Tonight and for the UK, we get consumer prices (May), then for Europe we get construction output and the German ZEW survey. US data is confined to housing starts (May).

Adam Carr is a leading market economist. See Business Spectator's glossary for definitions of technical terms used in SCOREBOARD articles.

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