Political stubbornness could spell end of euro

Market conditions in the eurozone continue to be characterised by weakness, volatility and intense uncertainty.

The dreadful plight of the Spanish banking system is the immediate concern this week, but the Greek situation is continuing to bubble away in the background.

The euro fell to its lowest level in over two years against the dollar this week and European equity markets are taking a real hammering. The weaker euro is obviously good news for exports from the eurozone, but the weakness is being fuelled by intense uncertainties in the zone and the future of the currency project is still sitting on a precipice. Reflecting this intense state of nervousness, bond yields in what are regarded as the safer sovereign bond markets have fallen to ridiculously low levels.