Spain on the ropes
The markets remained focus on the Eurozone yesterday as stresses intensified around the sovereign debt market.
Moody’s the US credit agency announced that they were delaying their much anticipated announcement on whether to downgrade the credit ratings on 114 banks until May, increasing fears of bank downgrades in 16 European countries.
As Spain acknowledged that it has probably fallen back into its 2nd recession since 2009, the yield on 10 year bonds exceeded 6% (7% is the figure that is considered the signal of a default) yet again and more importantly the gap with German bonds increased to over 4.3%. Spain also doubled their borrowing from the ECB during March to € 315 billion.
Despite all this the EUR has found some strength as the ECB confirmed they had not intervened in the bond markets, which had been rumored and would represent a fairly drastic measure.
In the US disappointing figures have led to a fall in the US dollar – EUR/USD touched €1.3147 before softening overnight to around €1.3190. GBP/USD starts the day around $1.5910.
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