Both announcements surprised the markets, and credit default insurance costs for Irish sovereign debt surged 36% higher than in the beginning of the month. Ireland was forced to pay investors 2.458% for six-month borrowings compared to 1.367% as recently as July 22. (Track the PIIGS Nations CDSs Here.)
Two-year Irish bonds went from a 2.8% yield to a 3.35% yield in two days, a huge move in the bond world. For comparison, the 2-year US Treasury bond yields about 0.50%. Greek, Italian and Spanish borrowing needs have all been well above expected levels, and the cost of credit default insurance for all countries has risen. The European Central Bank had to buy short-dated Irish bonds at the end of the week to try to calm the market. The Stoxx European bank index is down about 8% in the last two weeks. And the stress test "success" is not yet one month old.
Germany can't pull the whole Euro Zone out of trouble, since they are export-dependent and a goodly share of the exports go to other European countries that are exhibiting worrisome times again.
GDP has decelerated meaningfully in the US: Q4 2009's 5% slumped to a preliminary read of 2.4% for Q2 2010. But the bet is that gets revised to about a 1.4% number, for reasons we wrote about last week. Sentiment has turned even more negative and more "double-dip" scenarios are being painted.
Details about health care costs, financial regulation specifics and tax rates for 2011 are wanting.
Both Democratic and Republican approval ratings are at or near historic lows. (See: Your Taxes, Your Vote: 2010 Races to Watch)
The Federal Reserve is teeing up another round of quantitative easing, which is controversial to say the least, and weekly initial unemployment claims are getting back to the recessionary level of 500,000. Can I go back on vacation? (But if I know it and you know it, the market probably knows it. I still see a trading range with 1040 on the S&P the bottom of the range.)
CNBC Guest Blogs: Great People-Great Ideas