A slipping Euro isn’t the only indicator hinting that Europe’s unprecedented bailout may be insufficient to ease market fears over the developing debt crisis. 3M LIBOR (the intra-bank borrowing rate for USDs) has again begun to tick upward, albeit modestly; halting a retrenchment in the 3M TED spread. The spread has average 18.8bps over the […]
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Europe
Since the announcement of Europe’s unprecedented rescue package late last night, the Euro rallied to as high as almost 1.31/USD off of a low of 1.2529 on May 6th. However, as the dust settles from Europe‘s nuclear option to address the continents widening debt crisis, lingering risks are reemerging as the Euro shows signs of weakness […]
Europe’s rapidly escalating out-of-control debt crisis has brought about a rare occurrence, solidarity amongst its members; an elusive attribute in the European experiment. Eurozone members, who have worked tirelessly over the weekend, appear to have agreed on creating a $645bn loan package to help defend its currency and stymie fears of Greek contagion to other […]
Fear is beginning to seep into the European financial system with LIBOR rates edging up; leading to a sharp rise in the three month TED Spread (tracking 3M LIBOR against 3M US Treasuries). While nowhere near its crisis high of over 450bps, the TED Spread has enlarged to 32bps from just 19bps on May 3rd. […]
As the crisis in Europe continues to spiral out of control, I wanted to take a look at the cost of insuring against default for the PIIGS (Portugal, Italy, Ireland, Greece, and Spain). As you can see from the chart below, over the past several weeks 5Y CDS for the PIIGS has risen substantially, with […]
What a day, I wake up to the news that Fitch has downgraded Portugal, leading to a strong sell-off in Euro–reaching a ten month low against the dollar. This news was not tremendously surprising, and I expect the situation in Europe will get far worse before getting better, especially if Greece doesn’t find a funding […]
Several weeks ago Fitch warned that out of all Europe’s AAA rated sovereigns the UK was the most vulnerable to lose this rating. But, most analysts believe this would not be an issue as the government would implement austere fiscal policies reigning in large deficits and a growing debt load. Such policies do not come […]
While all eyes remain on Greece, Japan’s fundementals continue to weaken, and in some instances look worse than Greece. There are of course numerous technical and economic differences between the two nations; however, I do not believe Japan’s current deficits and debt load will be sustainable without drastic changes. This is an update from my […]
FRANKFURT (MNI) – Germany’s government is not allowed to help Greece, as such aid would violate European Union law, German business daily Handelsblatt reported Wednesday, citing an internal report from the German parliament. The legal report also rules out any form of financing of the Greek budget through the ECB or national central banks. “Moreover, […]
EU Commissioner Joaquín Almunia Mira recently said that he believes the current situation is the most difficult situation the EU has ever faced, and that Thursday’s meeting will be critical. He also said EU leaders have indicated that they will support Greece. Fitch anticipates that a Greek plan is ‘achievable’, but not ‘a given’. Fitch’s […]