SOVS Update

It’s all moving very quickly now.

The US 10 year is down over 25 bp from the highs, US stocks are leveling off as the dollar is looking up, hurting foreign earning translations as are rising risks of more serious trouble in the euro zone.

It’s also becoming more apparent that the austerity measures do not ‘fix’ anything but instead slow growth and cause the automatic stabilizers to keep the national gov. deficits high and growing, causing further credit deterioration.

While higher deficits are the answer for growth, at the same time they reduce already deteriorating creditworthiness.

The question is now whether the deficits get large enough to support the needed GDP growth that might restore credit worthiness before the loss of credit worthiness causes widespread defaults.

On Thu, Apr 22, 2010 at 6:35 AM, wrote:
EU release of budget deficit estimates for 2009 which were revised higher hurting the peripherals

Ref Entity 5y$ COD 5y/10y Coupon

Germany 35-39 1.5 4/5 25x
France 59-64 4 3/5 25x
Netherland 37-41 2 3/5 25x
Finland 26-30 1.5 3/5 25x
Norway 17-20 0.5 2/4 25x
Denmark 35-40 1.5 3/5 25x

Belgium 68-73 4.5 2/4 100x
Austria 66-70 4.5 2/4 100x
Sweden 36-40 2 3/5 100x

Greece 545-585 85 -120/-85 100x
Portugal 268-278 45.5 -22/-15 100x
Spain 178-188 23 -8/-3 100x
Italy 148-153 17.5 -1/3 100x
Ireland 175-180 24.5 -3/3 100x

USA €’s 38-41 0 2/4 25x
Switzerland 45-55 0 2/5 25x
UK 73-76 2 1/3 100x

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