Europe is getting tough, as Spain has taken the lead over Greece. Financial crisis is becoming more painful due to Spain’s banking sector disaster that has already sucked in over Euro 330 billion, but it still demands more money. They do not have collateral to offer against fresh borrowings and window dressing looks difficult.
The new debate that has started recently is that who will be the first to exit “EURO”, Greece or Spain. Greece could be lead by anti austerity leadership, which may take decision against the European policy agreement.
But Spain is certainly a bigger threat to the Euro-zone that could ultimately drag world’s major economies as its unemployment has reached 24 pct, it has deficit of over 8 pct, much above desired level of 3 pct. Its 10-year bond yield surged to hit the highs of 6.70 pct, 5-year tenor CDS 588 and country's depositors are fleeing away, whih is a more worrisome factor.
All eyes will be on European stock market and European Bond yields for direction. Market will remain Choppy. US Dollar, US Treasuries and Yen will remain in demand, but any positive statement from a responsible European/World leader or financial official could give market an excuse to correct.
EurO UndeR PressurE & GolD…May 30