The Bank of Portugal has ordered Banco Espirito Santo to replace management immediately in a move attempted at distancing the bank from the serious financial condition at Espirito Santo International - one of the bank's holding companies. Fears over Banco Espirito Santo's state last week sent tremors across the financial markets and led to the trading suspension of both Banco Espirito Santo and Espirito Santo Financial Group (OTCMKTS:OTC:ESFHF).

It would not be an exaggeration to call the banking sector a pillar for a nation's economy. It is a key organ, any disturbances in which can have serious implications for an economy. Some of the worst financial crises in the global economic history find their origins in the mess within the banking and financial sector. While the financial crisis of 2008 is still haunting the global economy, a new one seems around the corner. With Portugal's biggest banks showing sign of crisis, a panic has gripped the entire European economy. The case in point here is Banco Espirito Santo. The trading of the bank has been suspended by Portugal's regulator as its share price crashed 17%. The event has exposed fault lines in the European banking system, sending tremors to the entire European economy. In response, the STOXX index of European lenders has declined by around 11% since early June and has fallen to lowest level this year. Further, as an article in Telegraph suggests, the yield on country's 10 year debt has come down. Greek, Italian and Spanish debts have been other casualties. And this is just the beginning we believe. We would not be surprised to see other major economies getting caught in the doom loop.

U.S. municipal bond funds had some of the biggest outflows since January

After investors pulled out $790M in the week ending July 9. $691M of the outflows were in the high-yield sector, being withdrawn due to default concerns of Puerto Rican debt. Adding to the worries is Puerto Rico's newest law which allows for public corporations to restructure their debt. Barclays High Yield Municipal Bond Index, up more than 9.5% in mid-June, was up less than 5.5% this past Wednesday.

The Fed has agreed to end QE program in October

The Fed has agreed to end its bond-buying program in October. The new definitive closing date marks the end of the quantitative easing and controversial central-banking approach. The plan will decrease bond purchases in three increments until October, when the last $15B reduction is scheduled.

Weak gasoline demand in US leads to fall in price of Brent crude

Brent crude fell for a ninth straight session this morning following weak gasoline demand in the U.S. The drop marks its longest losing streak in four years, falling 14 cents to $108.14 a barrel at 3:45 GMT. U.S. crude tumbled for a tenth consecutive session, down 48 cents below Wednesday's close at $101.81 a barrel. The front-month price is on track to display its longest stretch of losses since July 1984.

India's services PMI in june shows expansion.

India's services PMI came in at a 17-month high of 54.4 for the month of June as against 50.2 recorded in May. A level above 50 signifies expansion.    

India's External Debt for FY2013-14 increased by 7%

India's external debt for FY 2013-14 came in at $440.6 bn, a 7% increase over the previous fiscal. This $32 bn increase was led mainly by the FCNR(B) swaps introduced by the RBI and increased external commercial borrowings by the banks. Short term debt stood at $89.2 bn.