TSX -134.43 fell from a 19-month high as investors bailed out of stocks across all industry groups after ratings agency Standard & Poor's downgraded Greek ratings to junk status on concerns about its ability to implement the reforms needed to address its high debt burden and also cut the rating on Portugal by two notches to A-minus, four levels above speculative, because of concerns about the country's ability to deal with high debt levels.
The worst fear is that other heavily indebted governments such as Spain and Italy will face the same vicious spiral, in which default fears lead to higher borrowing costs that in turn fuel default fears even more. A key indicator of attitudes toward Greece — the interest rate gap, or spread between Greek 10-year bonds and the benchmark German equivalent — hit an astonishing 9.63 points, a massive jump from around 6.4 points on Tuesday. The higher the spread, the more investors think Greece might default
· DOW -213.04 to 10,991.99 falling below the 11,000 benchmark
· Dollar -1.59c to 98.27cUS the downgrades sparked a flight-to-safety U.S. dollar rally that pressured commodity prices.
· Oil -$1.76 to $82.44US per barrel.
· Gold +$8.20 to $1,161.70 USD per ounce
· Canadian 5 yr bond yields -.06 to 3.02. The spread (based on the NEW MERIX 5 yr rate published rate of 4.64%) is no longer in the comfort zone at 1.62. Expect to see an increase in fixed rates today. Also the 3 yr ARM p-.50 special will increase its rate Friday midnight EST. Watch for updates
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