Intraday Market Thoughts

Spanish Yields at new Highs, Latest on CFTC FLows

by Adam Button
Jul 23, 2012 0:36

The news on Friday pummeled Spain like a piata and yields eventually burst to record highs. Risk trades wilted with the yen leading and euro lagging. The moves in the CFTC weekly positioning data were small. Latest on those Premium Insights is below.

Worries about the solvency of the Spanish government reached new highs as yields rose to records from 2-30 years. Poetically, the fears reached new heights shortly after Eurogroup ministers gave the final approval for the Spanish bank bailout.

Minutes later, Valencia asked to tap the regional bailout fund and the budget minister for Spain cut GDP and employment forecasts, adding that high borrowing costs were not factored into projections. Egan-Jones also downgraded Spain to CC+ from CCC+. The Spanish stock market fell 5.8% -- the most in more than two years.

The euro followed Spain down, hitting record lows against multiple currencies. EUR/USD fell below 1.2150 to the lowest since 2010.

Cable fell as UK fortunes erode alongside the rest of the continent. GBP/USD declined nearly a cent to 1.5616.

Risk assets held up relatively well. The S&P 500 fell 1% but closed the week up 0.4%. The Australian and Canadian dollars declined but only modestly.

The week ahead features US second quarter GDP on Friday. The consensus continues to fall with the latest estimates at a paltry 1.2%.

CFTC Commitments of Traders data, as of the close on Tuesday, showed no meaningful increase in euro shorts, a good sign that the trade is not overcrowded.

EUR -167K vs -166K prior

JPY +11K vs +9K prior

GBP unchanged at -7.5K prior

AUD +14K vs +19K prior

CAD -1.2K vs +4.3K prior

1 of the 2 remaining EURUSD shorts hit 1.2180 target, while the other nearing the 1.2120 target . The remaining EURJPY short hit its final target. Click here for direct access: Non Subscribers click here:



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