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21 May 2013
Flash: Is possible US credit downgrade an impetus for commodities? – Deutsche Bank
FXstreet.com (Barcelona) - Despite public holidays in parts of continental Europe, there were some notable price moves worth highlighting from yesterday.
In credit markets, the European subordinated financials credit index continued to gap tighter (-16bp) after the recent changes to financial CDS contracts proposed by ISDA. The index has firmed more than 40bp in the last four sessions, bringing the financials subordinated/senior multiple to 1.4x, its lowest level since 2010.
In commodities, silver and gold markets rallied an impressive 14% and 4.6% from the intraday lows, after silver was down by as much as 8.6% during the Asian session yesterday. Short covering and the earthquake in Chile were reportedly behind the intraday rally. According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “A warning that Moody's could downgrade the US' credit rating this year probably helped drive commodities, as did a 0.6% drop in the USD index.”
In equities, we noted the underperformance in Italian equities yesterday (MIB -0.6%) - perhaps after a poll published by the SWG, suggested that the Italian government's approval rating had fallen from 43% at the start of the month to just 34% currently.
In credit markets, the European subordinated financials credit index continued to gap tighter (-16bp) after the recent changes to financial CDS contracts proposed by ISDA. The index has firmed more than 40bp in the last four sessions, bringing the financials subordinated/senior multiple to 1.4x, its lowest level since 2010.
In commodities, silver and gold markets rallied an impressive 14% and 4.6% from the intraday lows, after silver was down by as much as 8.6% during the Asian session yesterday. Short covering and the earthquake in Chile were reportedly behind the intraday rally. According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “A warning that Moody's could downgrade the US' credit rating this year probably helped drive commodities, as did a 0.6% drop in the USD index.”
In equities, we noted the underperformance in Italian equities yesterday (MIB -0.6%) - perhaps after a poll published by the SWG, suggested that the Italian government's approval rating had fallen from 43% at the start of the month to just 34% currently.