Spain downgraded to BBB+ rating!

Standard and Poor's rating agency downgraded Spain to BBB+ yesterday at the NY close.  The agency believes Spain's government will need to provide further fiscal support to the banking sector. As a consequence this has heightened the risk that Spain's net general government debt could raise further.

The Dutch parliament has finally reached an astonishing budget breakthrough resulting with the country bringing down the budget deficit nearer to 3% of its gross domestic product in 2013. This ground breaking news comes just days after the Dutch government collapsed after failing to agree on cuts. The Netherlands now has a tight deadline to send its 2013 budget plan to the European Commission in Brussels by next Monday. The Euro fell against the USD as EMU consumer and industrial confidence dropped.

In the U.S, jobless claims decreased however the pace of decline has slowed down, putting pressure on the labour market. Today the release of gross domestic product for the first quarter of 2012 is the main event in the US. Markets are expecting a figure of 2.5% which is a drop of 0.5% YoY. A drop in GDP in the world’s largest economy could effectively cause risk aversion and strength in the USD. To add further worry we could also see a drop in Michigan consumer sentiment.

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