Photo: Daniel Goodman / Business Insider
This, from SocGen’s Michala Marcussen is basically the definition of conventional wisdom in this post-Spain-bailout-environment:Our strategists expect a sign of relief to shape markets Monday morning in Europe, but fear it could prove short-lived. This would confirm the by now all too well known pattern of denial from policymakers, pressure from markets, a patch from policymakers, relief rally by markets … declaration of the “worst is behind” from policymakers … only to see the next issue appear. A key point to watch is the response from the rating agencies.
Last week, Fitch downgraded Spain by three notches to BBB. S&P rates Spain BBB+ and Moody’s A3. We are encouraged that Spain has addressed many of its weakness – and now also the banks. The market response will, however, be key in shaping the sustainability of public finances.
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