Stocks Trade Higher As Spain Gets Rating Agency Downgrade

Financial Market report for June 14, 2012

Mike Mish Shedlock reports Spanish 10-Year Bond Yield Hits 6.96%, A New Euro-Era High; 2-Year Bond Yield Hits 5.19%  A big selloff in Spanish government bonds is underway this morning at 3:15AM central. Conditions can change by the US equity market open, but the results are currently very ugly. At the time of this writing, the yield on 2-Year Spanish Bonds is 5.12% (up 20 basis points) having soared as high as 5.19% (at that time up a whopping 27 basis points). The yield on 10-Year Spanish Bonds is 6.96% (up 20 basis points), having hit a euro-era high of 6.90%.

The BBC reports Closer Union Uurgent, EU Commission Chief Barroso Say. European governments need to agree urgently on steps to forge a closer union because of the eurozone’s “systemic problem”, the head of the European Commission says. DeutscheWelle reports Integration Is Answer To Eurozone Woes, Barroso Says

In surreal short sell covering fashion National Bank of Greece, NBG, led Greece, GREK, and Banco Santander, STD, led, European Financials, and Spain, EWP, led Europe, VGK, higher today, taking US Stocks, VTI, World Stocks, VT, World Small Cap Stocks, VSS, higher; this as India Infrastructure, INXX, and India Small Caps, SCIF, and India’s Banks, HDB, IBN, traded lower.  As Nokia, NOK, fell 16%, driving the Finland shares lower. And as Argentina, ARGT, fell strongly. The chart of Utilities, XLU, shows its rise to a new high; as DTE Energy, DTE, rose 1% on the day, with the stock almost tripling in value in the last three years.

In today’s news

Fed buys 30 year bonds two hours before Treasury sells 30 year bonds.

Tyler Durden writes in Zero Hedge Slovenia Is Spain: Is Another European Country’s Bank Bailout On The Way?  Has the Spanish bank bailout set a precedent for all other insolvent EMU member countries to follow? Of course. The only question is when is the stigmata of demanding a bailout (which Europe now has no choice but to grant courtesy of set precedent, be it via ESM or otherwise) less relevant than national pride, than preserving one’s banking sector, and preferably preempting the kinds of bank runs that pushed Spain to demand a bailout in the first place. For one small Eurozone member country the answer may be if not now, then very soon. Slovenia’s Dnevnik asks a simple question: “How serious is the situation of Slovenian Finance – are we on the way of Spain?” The answer, in not so many words: very likely yes

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