While the S&P downgrade of Spain’s credit rating by 2 notches to one above junk at BBB- (with negative outlook) is now just in line with Moody’s and is not much of a surprise, the possibility that 2 of the 3 rating agencies are on the cusp of having Spain in junk territory will influence the category of institutional buyers of Spanish bonds. The Spanish 2 yr and 10 yr yields are near 2 week highs.

Brazil unexpectedly cut interest rates by 25 bps to 7.25%, a new low and South Korea did as expected by cutting rates also by 25 bps to 2.75%.

Australia reported a Sept job gain that was 3 times what was expected.

After two days of gains, the Shanghai index fell .8% after the PBOC only injected 59b of yuan in reverse repos, well below the 265b they put in on Tuesday. The yuan did rise to the highest level vs the US$ since 1993.

AAII: Bulls 30.6 v 33.9 Bears 38.9 v 33.2

Category: MacroNotes

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