Fear grips the markets

Volatility in the money markets over the last 24 hours has been staggering! 

The main economic events yesterday were related to the UK and European central bank decisions- however this was not the driver for the volatility.

The exact location of the fear was GPS…Greece, Portugal and Spain. 

There was a scramble for safer shores in the USD and the YEN and out of the euro and higher yielders and to some extent the pound as panic swept the markets. 

Escalating debt concerns are increasing in these European economies and this drove stocks and commodities lower- debts spreads between the good eggs and bad eggs widened considerably and could increase further.

The market clearly needs some reassurance in regards to the bad economic apples of Europe and ECB president Trichet did little to reassure the markets yesterday so we await a viable plan from each economy.

It seems the simmering problems perceived for some time within Europe are finally coming to the boil and the question is can each economy sort out their own mess? 

You could also throw Ireland into the equation to formulate the PIGS of Europe- if they cannot reduce their debt- will the ECB and IMF offer a trough for aid? 

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