- The Moody's downgrade of Greece to junk, whilst not unexpected, is nevertheless impacting spreads. Greece, Portugal and Spain spreads on the move up again.
- Greece and Portugal already blown out earlier so any uptick now will be difficult to sustain.
- Spain, however, is a different story technically. May10 high of 4.78% under threat now. After that, watch the Jul08 high of 5.00%.
- Perhaps its time to revisit the short EUR/USD trade.
- [Spain 5.2 bio EUR bill auction today : 12 mth avg 2.303% (+71 bp) vs 1.59% in May; 18 mth avg 2.837% vs 1.951% (+88.6 bp) in May. Next downgrade = Spain?]
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