US futures continue to fade.
As for why markets are fading. Here’s Nomura on some of what’s happening this morning:
The day began the in risk-off mode with EuroStoxx down 0.9%, EUR/USD 0.2% lower, yields on 10yr US Treasuries and Bunds down 2bp and 5bp respectively and the 10yr European sovereign spreads to Germany up by 5bp, led by Italy and Spain, where spreads widened by 13bp and 9bp respectively.
It is difficult to pinpoint this to any particular development. Over the weekend former Italian PM Berlusconi gave a press conference, questioning the austerity delivered so far by the government and pledging to reverse some of the policies in the next legislature. This matters as it could jeopardise approval of the 2013 Budget, which is currently being heavily debated in parliament. There has also been negative headlines from Greece, where little progress has been made on the labour laws contested by a junior coalition partner, prolonging an impasse on a crucial austerity package. In addition the fact that company earnings have been less inspiring has not helped either; according to our Credit Strategy team just 37% of S&P 500 companies have so far reported revenue that beat forecasts, although earnings have fared better with 62.5% above expectations.
The futures market closes at 9:15 AM ET, and after that the US stock market is closed.