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Pre-Market Primer: Greek CDS Won't Be Triggered, Strong Data Lifts US Stocks


More dark clouds over Europe as the ISDA rules that Greece isn't in default... yet.

Equities and commodities markets are proving resilient today, despite a spate of dark economic indicators coming out of Europe.

Unemployment in the 17 countries using the euro hit 10.7%, the highest in the history of the common currency. An index of euro-area manufacturing rose ever so slightly but still indicated contraction. Inflation also rose one-tenth of a percentage point to 2.7%.

Holders of credit default swaps on Greek-law bonds will not be cashing in. The International Swaps and Derivatives Association decided just minutes ago that a credit event had not occurred in Greece, and CDS contracts will not be triggered. The possibility of a credit event is still on the table. CDS will be triggered if Greece does use the CACs to force involuntary losses on investors in the next week.

Asian markets were mixed. Japan's Nikkei index declined 0.2% after closing at its highest since last August on Wednesday. Chinese PMI data rose for the the third straight month to 51,showing that manufacturing continued to grow in February, but only very slowly.

US stock futures were positive this morning, and turned higher after some positive economic data was released.
  • Dow (^DJI) futures are up 0.25% to 12,969.00.
  • S&P 500 (SPY) futures rose 0.23% to 1,367.50.
  • Nasdaq (^IXIC) futures rose 0.38% to 2,633.00.
Initial claims for jobless benefits for last week stayed flat at 351,000, less than the 355,000 expected. Personal income and consumer spending rose in February, but slightly less than expected.

After suffering a firestorm of customer anger over retail banking fees last fall, Bank of America (BAC) is trying again. Customers will have the option of either taking on a mortgage, getting a credit card, or maintaining a minimum balance to avoid fees between $6 and $25 per month.

Chevron (CVX) is in talks with Russian authorities, seeking to get a piece of Russia's offshore oil reserves, particularly the reserves under the Arctic Ocean.

Oil futures are rising again today, as investors' fears of a war in the Strait of Hormuz offset downward price pressure from the glut of supply in the US. WTI rose 0.42% to $107.52/barrel and Brent crude rose 0.66% to $123.47/barrel this morning.

China's has been diversifying the share of dollars in its massive foreign exchange reserves. According to calculations by Dow Jones, 54% of China's $3.2 trillion reserves were allocated to greenbacks in 2011, down from 65% in 2010 and 74% in 2006. China's been moving its current accounts surplus into other high-rated sovereign debt, primarily European bonds.

Twitter: @vincent_trivett
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