EU Sees ‘Sustainable’ Recovery, Eyes Exit Strategy

une 19 (Bloomberg) -- European Union leaders spotted the first signs of a “sustainable economic recovery” from the worst slump since World War II and started planning to roll back budget deficits piled up to combat the financial crisis.

In a draft statement at today’s summit in Brussels, the 27 EU heads of state and government said the looming end of the recession makes additional stimulus unnecessary, adding that it is time to start hatching an “exit strategy.” They also agreed to overhaul financial regulation after banking supervision failed to contain the crisis sparked in the U.S. housing market.

“Further budgetary stimulus would not be warranted and attention should shift toward consolidation, keeping pace with economic recovery,” the leaders said in the draft, which was obtained by Bloomberg News. “There is a clear need for a reliable and credible exit strategy.”

The EU leaders’ outlook is more upbeat than that struck last week at a meeting of Group of Eight finance ministers, which ended with a statement noting “signs of stabilization in our economies.” U.S. Treasury Secretary Timothy Geithner said at those talks that “it’s too early to shift toward policy restraint.”

The expression of official optimism pushed up the euro and prompted declines in European government bonds. The yield on the 10-year German bund rose to 3.55 percent. The euro was up 0.3 percent at $1.3946 at 1:21 p.m. in Brussels.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aZsiT87PgH7U

Buy signal...

 

I think the IMF came out with a report today also saying the recovery has begun. I find it unlikely that so many countries, economists etc. would predict recovery in 2010 (albeit a slow one), unless there was some merit to it. By all means the top dogs have been wrong before and will be wrong again in the future, but I think the odds of recovery are upped every time new reports are released showing optimism.

 

Wait a second...

Why would optimism result in a decline in euro bond prices and an increase in yield...?

Increases in yields are associated with higher risk....

 

Money moving out of bonds and into equities = optimism.
Inflation fears - money moving out of bonds and into equities.

 

What about this "disaster averted" news story?

http://finance.yahoo.com/tech-ticker/article/266764/Disaster-Averted-But-'Dr.-Doom'-Still-Sees-Grim-Economic-Outlook?tickers=%5EDJI,%5EGSPC,SPY,DIA,TLT,TBT,UDN

Did today everyone just decide the recession is over? Reminds me of that chart of pompous prognosticators.

http://www.gold-eagle.com/editorials_01/seymour062001.html

 

Nobody said anything about the recession being over...
They are saying slow growth in 2010. As opposed to economic decline as per the bears.

 

I am expecting a SLOW recovery and NOT a V shaped recovery. Only when I hear pundits talking about "inventory built up", I ask myself in which world they are living...Fifth dimension ?