Eurozone Debt Crisis Deepens Sending Euro Lower and Gold to New Record at EUR 1,080/oz
The euro, global equities and bonds in peripheral Eurozone countries are all lower this morning on heightened concerns about the debt crisis in the Eurozone. The euro has fallen against all currencies and is now at a record low against gold at EUR 1,080.21/oz. Silver is lower against most currencies but is higher against the Australian dollar and the euro ( EUR 24.80/oz).
Greece’s 10 year government debt has surged to 16.98%, Portugal’s to 9.6% and Ireland’s to a new record at 10.76%. The yield on Italian 10-year government debt is up 9bp to 4.85% after S&P cuts its rating outlook on Italy’s sovereign debt to “negative” from “stable”. The Spanish 10 year bond has risen 11 basis points to 5.57%.
Equity markets in Europe have followed their Asian counterparts lower. Asian equities fell due to Eurozone debt concerns but also inflation concerns and the risk that the US economic recovery is faltering. Italy’s stock market (FTSE MIB) is down 3% while Spain’s IBEX is down 1.7%.
Besides sovereign debt risk, gold is also being supported by geopolitical risk as seen in the increasingly unstable nuclear armed Pakistan where armed militants attempted to take over Pakistan’s naval air force headquarters.
There is increasing tension between the U.S. and Pakistan after what the U.S regards as Pakistan’s failure or collusion regarding Osama Bin Laden.
China has increasing economic and military ties and interests in Pakistan and has vowed to standby Pakistan and has called on the world to respect Pakistan’s sovereignty.
Separately, in an interview with the Financial Times on Saturday, Henry Kissinger has warned of a world war involving Pakistan and India.
And for Gerald Celente ‘THE GREAT WAR’ has already started (and I totally agree with him):
– The No.1 Trend Forecaster Gerald Celente’s Dire Warning For The World (Video – Must-see!)
Wall Street Journal, May 23, 2011: