Moody’s Gifts Spain with a Reaffirmation
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(eToro Blog) Moody’s Investors Service offered Spain’s government a reprieve when they reaffirmed the country’s credit rating at BBB-, still just barely in the investment grade level. Analysts expected, and market players had already priced in, a downgrade into junk territory so the news came as a surprise and helped to lift the Euro. Despite the reaffirmation, Moody’s joined its peers, Fitch and S&P, in assessing a negative outlook on Spanish debt. In a statement, Moody’s cited the support from the ECB and the Eurozone policy makers, as well as the government’s efforts on its own behalf, as the reasons for holding the rate at the current level.
Ahead of a bond auction tomorrow, that news should help keep bond yields from rising further; on Tuesday, 10-year bonds sold at 5.792%. Yields are certain to fall once Spain formally requests assistance from the ECB, which Moody’s believes could be in the form of an Enhanced Conditions Credit Line funded from the European Stability Mechanism.
The EUR/USD pair is currently higher at 1.3118, only a few pips from the day’s high. The majority of OpenBook’s traders don’t expect the pair to breach that high as sentiment is predominantly bearish with 66% of traders selling against 34% buying.
OpenBook guru UKtrader earned 8.5% on a long position in the pair several hours ago; not long after the Moody’s announcement. Over the past quarter, the guru has a 34.6% allocation in the EUR/USD which earned 2.7%; in the past month, however, the allocation was increased to 39.8% which earned 5.4%. Over the last quarter, the guru’s realized equity stood at 92.8%, the highest among the various recording periods, though all of them were in the green. As of this writing the guru has 155 copiers and 2,742 followers.
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