ANNOUNCEMENTS
NYSE has a half day on Friday
IDEAS
Macro
German Chancellor Angela Merkel again ruled out joint euro-area borrowing and an expanded role for the European Central Bank in fighting the debt crisis. Euro bonds are “not needed and not appropriate,” Merkel said at a press conference. She said euro bonds would “level the difference” in euro-region interest rates. “It would be a completely wrong signal to ignore those diverging interest rates because they’re an indicator of where work still needs to be done.”
Comment: First there is not enough interest in German bonds, now this. It is political why German will not accept a common EU bond. Again, markets do not view this in positive light as can be seen from the slide in the EURUSD and also the EU markets
Hungary lost its investment-grade rating at Moody’s Investors Service after 15yrs as the Cabinet seeks IMF help to boost confidence in the EU’s most-indebted eastern member. The foreign- and local-currency bond ratings were cut one step to Ba1, the highest junk-level score, from Baa3, the company said today in a statement. Moody’s, which awarded Hungary its investment grade in 1996, assigned a negative outlook. The country is rated the lowest investment grade at S&P and Fitch Ratings.
Comment: Not unexpected from the most-indebt member. S&P and Fitch are likely to downgrade also. Negative outlook means there is a chance of further downgrade. But this may not put too much pressure on the markets unlike the point above
Sources: Bloomberg, Reuters, WSJ, The Business Times, Analyst Reports, Company Announcements
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