Old eurozone worries came back to the surface yesterday when the European Central Bank (ECB) was brought before the German Constitutional Court, over allegations that the bank operated outside its task list when it purchased government bonds during the debt crisis. News of the court case pushed the cost of borrowing higher for eurozone countries, which caused a worry for investors.
Triggering further problems for the eurozone, the Athens administration suspended 2000 workers at the state TV and radio broadcaster as the Greek government has decided to shut the operation down as part of its cost-cutting programme. This could lead to strikes by stirring up anti-austerity sentiment, which may spill over into investor confidence.
In the US the Dow is down ten points at 15,112, due to traders being cautious ahead of the US government bond auction at 6pm (London time). The yield on the ten-year bond at the previous auction was 1.81%; Jim O’Neill, formerly of Goldman Sachs, believes that at today’s auction this could rise to 4%. If investors consequently start to take their money out of bonds, they might invest it in equities.