Archive - Aug 23, 2010

According to Moody's semi-annual European Sovereign Outlook report, published earlier, the rating agency is once again on track to destabilize Europe, by firing the latest warning shot. In the report the agency, which at last check is still without a sovereign research head after the current one left some time ago, said that slower economic growth in Europe might spark downgrades to credit ratings for countries on the continent, as any slowdown could weaken the ability of individual countries to absorb additional shocks to the system, as cited by Dow Jones. "The ratings agency said that the fiscal and economic adjustments necessary to stabilize government debt ratios are likely to be difficult and painful." In other words more than magic may be required to keep the insolvent continent together (and for the very unshocking observation that Spain has been using its social security fund to buy up its bond to keep the false impression that all is good, read today's Frontrunning). In other words, the latest currency devaluation race is once again on. And for the time being the AUD seems to be taking its overnight mispricing from much lower fair values in stride.

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 23/08/10

Nothing to see here, move along ...