Are credit agencies on a weekly quota? There is Portugal followed by Hungary. Is there actual collusion? Fitch followed by Moodys. Is there an agency ombudsman? We can all agree that we are in this mess together and that we are all paying for it in some fashion. A solution requires us to work together, so there is a degree of responsibility on the agencies to be a a tad flexible in their reporting. Announcing that Hungary was downgraded after this week certainly was not going to be good for the CE3‘s or the EUR.
The “agency brotherhood†has not done itself any favors of late. The erratic and irresponsible reporting “potentially†of France did more harm to a fragile market psyche than perhaps a potential downgrade of a Euroâ€core†member. Teasing us with a yes or a maybe does not ooze confidence in the agency sector outright. On a Black Friday, with the largest Credit Markets half asleep, they “had†to report another downgrade? It’s true, there is never a good time to deliver bad news!
Lack of data cannot seem to stop the wheels falling off the runaway train that’s carrying all the asset classes. Global bourses are in the red, some for a seventh consecutive day, ‘safer†haven bond yields are approaching new lows, while Euro peripheries yields balloon again. Black Friday is one of the most illiquid trading days and despite this, current price action does not seem to be exaggerated as the EUR again cuts through some key support levels like a “knife through butterâ€.
The market is witnessing an ineffective ECB this morning, again. What’s new. They were seen lifting neighboring debt in the secondary Italian market, around similar maturities, rather than directly intervening in the Italian primary market. Lack of financing details for the rescue fund and Merkel, again, rejecting the prospect of joint Eurobonds, is making the market increasingly nervous.
The ECB was not the only central bank trying to influence the markets overnight. The BoJ was hard at work, sending public surveys to their banks questioning about potential help in FX. Perhaps this is a new reverse psychology technique? If the conventional methods cost too much, you got to be open to new ideas! For technical traders, tonight’s closing levels will be closely watched, while the “seasoned†dealers try to comprehend these fundamentals and see what Spain is up to!
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Crude and Gold get off the floor
