Overnight price action was relatively subdued after Sunday to Monday’s overnight fireworks. The main news was Moody’s downgrading to negative outlook the sovereign debt of Germany, Netherlands, and Finland, due to the European support programs. I think the main impact is political, as it makes the German public even less likely to support future debt-sharing.
Here’s what happened overnight:
- SPX futures signal a lower open by around 0.3% and Treasury bonds close to flat
- Asia was mixed after a better than expected Chinese PMI
- Europe is down 0.75%, led by Spain and Italy, where sovereign yields are again hitting new highs for 2012. Interestingly, safe haven countries’ yields (e.g. Germany, Netherlands) are higher as well because of the Moody’s downgrade
- The dollar is mixed in a quiet overnight session
- Commodities are broadly lower, led by grains, with corn, wheat, and soybeans down around 2%