European Market Update 2/28 - German Unemployment Rate Falls to Multi-Year Low

- The European indices are currently off of their worst levels, but remain down about one percent across the board. Components from the mining sector represented the biggest movers pulling the European indices further into the red.
- European government bonds are currently near session lows, but remain in positive territory overall as investors moved from equity investments into fixed income investments. Similarly in the UK gilts are also trading higher, but currently sit near session lows.
- The German ILO unemployment rate fell to 7.4%, its lowest level in five years today, while the German unemployment rate fell to 9.3%, its lowest level in over five years. The unemployment change was –79k compared to estimates of –40K. Unemployment fell as economic expansion continued in Germany, prompting employers to hire more workers. Upon the release of the unemployment data the German Labor Agency forecasted average unemployed of 4M in 2007.
- Nationwide house prices in the UK rose for their twelfth month signaling that the Bank of England’s three interest rate hikes have yet to cool off the UK property market. The average house price rose by 0.7% from January to £174,706 in February.
- In the minutes from the February 14-15 meeting Sweden’s Riksbank announced that February’s decision to raise interest rates was unanimous. Riksbank said that it is reasonable to assume further interest rate hikes, but reminded us that the future direction of monetary policy is contingent upon economic data.
- Euro-Zone unemployment fell to its lowest level in more than a decade during the month of January. While unemployment declined CPI fell to 1.8% y/y from 1.9% in December, while Core CPI y/y rose to 1.7% from 1.5%.
- The EU Employers Group raised its 2007 GDP forecast to 2.2% from 2.0%. The Group also cut its 2007 inflation forecast to 2.0% from 2.2%. Finally, the EU Employers Group forecasted 2008 GDP growth of 2.0%, and inflation of 1.9%.
- Front month crude oil futures are currently trading in negative territory in the session, but sit on session highs. Spot gold has regained some of its recent losses, currently trading higher by over $12 in the session.