Weekly Fundamentals: Commodities Advance, Ignoring Lingering Sovereign Risk

9 July 2011 9 July 2011

BonTrade

Financial markets last week were mainly directed by the fate of Greece, sovereign debt problems in other peripheral countries in the Eurozone, the ECB's stance as well as some macroeconomic data. Most commodities under our coverage rallied as Greece eventually passed the austerity plan and was grant funding from the EU/IMF. Rating agencies are discontent with the debt rollover plan with S&P warning that it would consider Greek debts as 'selective default' in such case. Moody downgraded the credit rating of Portugal to Ba2, or junk, citing there is 'growing risk that Portugal will require a second round of official financing before it can return to the private market'.