Soverign Debt Panic Amongst The PIIGS
Sep 08, 2010
U.S. stocks fell for the first time in five days Tuesday, ending the longest streak of gains for the S&P 500 Index since July, on concern the European debt crisis may worsen and hamper global growth. Bank of America and Citigroup fell at least 2% as European banks slid on concern stress tests understated potential losses from sovereign debt.
Meanwhile ConocoPhillips and Chevron slumped more than 1.2% as crude oil fell the most in a week. But Oracle rallied 5.9% after naming Mark Hurd, former chief executive officer of Hewlett-Packard as president.
Today despite some token buying by the ECB and a decent Portuguese bond auction the bond vigilantes have again been out doing their worst pushing the Irish / German 10 year spread out to levels not seem since 1988 when the debt GDP ratio was 118% . Indeed yesterday saw the worst single daily performance by Irish Government bonds ever in terms of spread widening.
Greece is also back in the crosshairs in response to a downward revision to Q2 Greek GDP to -1.8% from -1.5% originally, and on news the National Bank of Greece plans to raise Eur2.8 bln of capital. The latter may be especially alarming in the current environment, but really reflects a desire for extra security and also a cash hoard to potentially spend on weaker rivals; ATEbank stands prominently in this respect.