On the heels of China’s move to devalue the yuan on August 11, the market’s attention abruptly shifted to something we’d been discussing for quite some time. Namely, China’s rapidly depleting FX reserves.
Amid cuts in aid and surging taxes, it appears the market remains less than impressed at Connecticut's debt sustainability. Following last week's disappointing bond auction, CT bond risk has spiked to 65bps over the benchmark - a record spread demanded by investors to take CT repayment risk. CT becomes the 4th riskiest US state after NJ, IL, and PA.
As Bloomberg notes,
In a worryingly coincidentally timed move, Moody's has put Desutche Bank on review for downgrade, citing "execution challenges" in its new strategic plan. The worrying aspect comes from the fact the timing is entirely fitting with the ratings downgrade that started the last and most painful down-leg in Lehman's collapse...
Full Moody's statement:
Moody's reviews for downgrade Deutsche Bank's ratings (senior debt at Baa1)
To sum up: China car sales crash by most on record (boom goes the overseas growth meme), US existing home sales plunge most in 6 years (boom goes the domestic housing strength supporting consumption meme), Williams and Lockhart go full hawk-tard (positing April as "live" and suggesting everything is hawkishly awesome), and one of our most succeesful 'innovative' tech firms unveils the worst product launch ever... and investors buy stocks with both hands and feet...
Over the course of documenting the ECB’s push to phase out the €500 note, we stumbled upon something rather interesting that’s taking place at Greek banks.