Eurogroup meeting outcome mulled by money markets

The Eurogroup meeting ended with some proposed progress through an outline for the recapitalisation of Spanish banks.  Eurogroup meeting outcome mulled by money marketsAn initial 30 billion out of the total 100 billion will be paid via Spain’s existing bailout fund by the end of July and following this Madrid will channel funds through to stricken banks.

Therefore Spain’s government debt will take an initial hit until the new system is in place via a new eurozone banking supervisor headed by the ECB.

The key question for the markets is will this be enough?

The developments in Spanish rates will be a focal point as the 10 year level hovers around the unsustainable 7% level.

The euro has managed a small recovery back over 1.23 against the USD but still looks fragile.

UK data out has seen May Industrial Production data rise sharply to +1% month on month- this is the strongest rise since March 2010.

We have seen a spike in GBP/USD by 40 pips on the news and it is good to see some progress in this area and some good news for the UK economy.

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