News that Moody's has put Portugal's debt on review for a possible downgrade to the AA2 rating has pushed the euro to a new low for the move. Moody's says a 1 or 2 notch downgrade is possible. As we have noted, the rating agencies, and in particular Moody's seems way more optimistic on the debt quality than our proprietary models and the market. Downgrades seem like a matter of time--not if but when and how much.
Meanwhile, the latest reports indicate that three have died in Greece as a result of a fire set to to a bank in Athens. This plays into market anxiety that either Europe will lose its will to support Greece (i.e., seek a orderly restructuring) and/or Greece may lose its will to implement the austerity measures in the midst of a serious economic downturn.
The US ADP and Challenger jobs data, generally better than expected, is no match for the European developments today. US Treasuries continue to draw a safe haven bid.
Moody's, Protest in Athens turns Violent, Euro Moves below $1.29
![Moody's, Protest in Athens turns Violent, Euro Moves below $1.29]()
Reviewed by Marc Chandler
on
May 05, 2010
Rating:
