Markets actually looked quite stable right up to the moment that the US came on line at 14.30 yesterday, at which point we managed to find a whole swathe of items to worry about.

At the forefront seem to be the concerns over Greece and yields on 10-year debt reportedly moved higher by 40 basis points over German similar dated issue. The Greek government is now forced to borrow at over 7pc, which is apparently an almost terminal situation even though, prior to EU membership, such a rate would have been considered fantastic; odd how perspective changes. The Greek State finances have been a disaster for decades, as have many other Southern European states, as fraud and corruption have become almost a national sport. Unless the Greek equivalent of the Inland Revenue sharpens its claws, the economy will continue to lurch along the same line of wealthy private sector and impoverished public finances. The same could be said for both Italy and Spain, where the Black Economies are said to rival the taxed portion.

The problem is, of course, if you suddenly tax a huge number of people where no such liability was in the past then you risk sending the economy into a tail spin (this is not, in any way, a defence of avoiding tax, just a factor that governments have to consider).

Until some stability is reached in the Southern States, we can expect continued gyrations in markets involved. The woes of the Greek bond markets may well be a forerunner of the next problem likely to raise its head. At some point quantitative easing (and general state liquidity provision) will be halted and in most case actually reversed. The BOE has now bought (printed money) some £175-200bln of bonds (mainly Gilts). At some point they will not only have to sell these off but will be doing so into a market that is expecting a further £150bln of issuance anyway in 2010 from the Treasury. With virtually every state on the Western half of the Planet putting out the begging bowl as well and some quite substantial corporate refinancing required as well, it is tempting to suggest that the BOE gets out there sooner rather than later.

While the Gold market has been looking a tad moribund recently, a Bond crisis would soon get the Gold Bugs crowing once again.

As mentioned the markets had a bit of a grim day but it was in truth difficult to see any particular reason for the activity. Corporate results (especially Ford) were generally better than we had any reason to expect and traders seemed to just suddenly lose heart.

The FTSE is opening reasonably well after the late selloff yesterday, pushed the index to its lowest closing level since early November. The support level at 5180/5200 mentioned many times in the last few weeks, were finally broken as our fears over the continually attempts finally proved correct. This said, the sell off on the break has not engendered any follow through this morning, and we are now back up at 5185 some 40 points above the close, and bulls will be hoping that the early action will result in a push back above the support region into the low 5200’s before the bell this afternoon. Should this happen, the breach might just be considered a US inspired aberration and the support level may re-establish itself again. Should we threaten to close below 5180 again this afternoon, we may find some further profit taking later in the session as investors look to lock in what has still been a good rally from March last year.

On the currency front, the Euro has been weakening again, finally dropping below 1.40 yesterday. The currency is certainly running out of friends at the moment as we drift ever lower versus the Dollar, Yen and Pound. Yesterday’s comment about resistance at 1.1580/1.1600 versus the pound proved prescient as the failure to hold the break higher caused an immediate drop back to 1.1540, to the joy of some of our short term punters. The pull back may prove temporary though, as the momentum at the moment is definitely not in the Euro’s favour. Of course, all the majors have a whole suite of problems themselves, so it might be considered a question of which currency is the weakest rather than which is the strongest!

Buyer’s remorse in the Euro seems to have well and truly set in but there are probably large funds still long of the currency, so calling a halt to the weakness might be premature.

Gold is still suffering as the dollar regains some strength, and yesterday’s breach of the long term bullish trend line support at approximately $1080 brought out a swift sell off down to $1073, as stops were triggered only for the buyers to come back into play almost immediately and push the price back up. At the moment the market looks rather full, with longs still hoping for a continuation of the five year rally, while ‘techies’ worry about momentum/supports etc. As mentioned earlier, if the bond markets do get into a pickle then Gold might well get a second (or is it third?) wind. Resistance is now at 1088 and 1103/05; support, as mentioned, at around 1080.

Oil is also acting curiously as all the commentators keep warning us of lack of future supply and increasing demand from the emerging markets, while we watch the price fall back into the low $70’s. The OPEC oft mentioned target of $75 seems to be becoming the focal point of the oscillations, but if the Oil producing nations start to feel that the global economy can bear it, we may see some slight closing of the taps to restrict demand and increase prices. At the moment, bulls are hoping that $72.50-$73.00 will hold as it managed to do yesterday and on Wednesday. On the other hand, the old support at 75.50 is now looking like resistance now and has proved something of a barrier to the last week’s attempts at rallying.