S&P downgrade could force Spain into aid request
City Index October 11, 2012 4:01 PM
<p>The US ratings agency S&P cut Spain’s rating by two notches to BBB- (just one notch above ‘junk’ status), with the outlook remaining negative. The […]</p>
The US ratings agency S&P cut Spain’s rating by two notches to BBB- (just one notch above ‘junk’ status), with the outlook remaining negative. The timing of the announcement came as the US session finished and with market liquidity at a premium the single currency dived 50 points but held the 200-day moving average at 1.2822.
The risk from here is that the downgrade adds pressure to Spanish yields thus forcing Spain to ask for aid. Spain will today launch a private placement of 2015/2016/2017 bonds, ending Wednesday, October 17. The placement, totalling €4.86bn, will finance part of the country’s regional liquidity fund. After the rating downgrade, this will be keenly watched.
The Australian jobs report has been taken as a strong positive with the headline number showing a strong gain of 14.5k against the 5k predicted. Full time employment outperformed to 32.1k, whilst part-time employment was weaker at -17.7k. The unemployment rate is higher than expected but that seems to be because the participation rate has gone up from 65% to 65.2%. Overall this is a very good set of numbers.
Supports 1.2820-1.2755-1.2680 | Resistance 1.2880-1.2910-1.2935
Supports 77.80-77.40-77.05 | Resistance 78.25-78.50-78.80
Supports 1.5985-1.5960-1.5910 | Resistance 1.6030-1.6070-1.6120
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.