Stocks, Commodities drop as Spanish yields rise

by Dagmark Garcia | Monday, Apr 16, 2012 | 326 views

The yields on the Spanish bonds jumped to a four month high ahead of the debt sale , while the euro and the commodities saw a decline . Most of the European stocks pared gains.

The yields on the 10 –year  Spanish  bonds inched by 18 basis points and reached a high of 6.16 percent , the best since December . The SXXP also increased by 0.4 % while the futures on the S&P 500 also added 0.2 % to itself. The euro on the other hand slid to $1.2995 , the lowest in three months . The yuan also dropped its value after the government doubled its currency band against the U.S dollar .

Spain  is set to sell the debts in the middle of this week with the cost of insuring debt against default reaching record levels . The retails sales in March rose , giving an indication that the consumers are weathering a hike in the prices of the fuel  ahead of the department of Commerce’s report .

If the rise in the Spanish yields continues then they might as well need assistance just like in the case of Greece. While the euro also looks vulnerable with a possibility of breaking down further in short term.

The yields on German bunds also slipped by one basis points , meanwhile the difference in yields of Spanish bonds and German securities grew up by 18 basis points standing at 442. While the Italian German was 14 basis point.

There was a jump of 9 basis points on the Spanish credit default swap and it rose to an all time highest level of 511.5 . The Italian contracts also surged by 4 basis points  , seeing their highest level of three months .

The euro saw further decline with a continuous second day depreciation against the U.S dollar and the Japanese yen to which it slid down by almost 1 % . The yen strengthened its position against all the 16 most traded currencies . The Dollar index also  rose by 0.3 percent.

After the largest retreat in almost 6 months the S&P 500 will be looking forward to gain some momentum as five major companies including the Citigroup Inc. are scheduled to release their results . With the bad Chinese economic growth data , the prices of metal and oil went  down , as it’s the biggest importer of metal and energy. Emerging markets also had declines after being steady for almost 4- 5 days.

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