- In Italy, a broad three-party coalition was sworn in on Sunday.
- Bank of Cyprus has converted 37.5% of deposits above EUR100,000 into equity.
- In Iceland, the two parties that governed when the crisis hit have regained majority.
In Italy, a new government was sworn in on Sunday after two months of political deadlock. The government is a broad coalition of the left-wing Democratic Party (PD), Silvio Berlusconi’s centre-right People of Liberty and Mario Monti’s Civic Choice. The new prime minister, Enrico Letta (PD), will present a program of institutional and economic reforms to the parliament today. He has also indicated that he will try to convince European partners to give Italy more time to reduce its budget deficit. The new government will have to win a confidence vote in both houses, but this does not seem to be a problem. Fabrizio Saccomani, a Bank of Italy Governing Board Member has been appointed as finance minister.
In France, the government has apparently changed its mind on capital gains taxes, and will present a plan to cut taxes, reverting the big tax increases introduced last year.
Over the weekend, the Bank of Cyprus converted 37.5% of deposits above EUR100,000 into equity. An additional 22.5% is held for possible conversion in the future.
In Iceland, the two parties that governed the country until 2007 and then blamed for the financial crisis, regained majority at this weekend’s parliamentary elections. If they form a coalition they will probably aim to remove capital controls as soon as possible. A 20% across the board write-down of mortgages is also on the table.
Net income in Chinese industrial companies increased only 5.3% y/y in March, down from 17.2% in the first two months of the year.
U.S. equity markets closed with small losses Friday, partly reflecting weak Q1 GDP figures released early in the session. S&P500 lost 0.2% and Nasdaq was down 0.3%. There was little direction In this morning’s Asian session, with Nikkei down 0.3% and Hang Sing up 0.1% at the time of writing.
U.S. government bonds traded without much direction after European markets closed Friday.
In the FX markets, the EUR/USD increased to 1.305, partly reflecting expectations of weak U.S. consumer spending data today. The JPY gained slightly this morning, and the EUR/JPY is now trading around 127.3.
The USD/NZD gained on expectations that strong housing data may force the central bank to hike rates.
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