Commodities rebound, Greek debt downgraded

Commodities managed to rebound on Monday but there was more bad news for Greece. Bloomberg reports:

Commodities rebounded from the biggest weekly slide since 2008 amid optimism about economic growth and speculation recent declines were excessive, helping drive a rally in U.S. stocks. European equities fell and Greek bonds tumbled as Standard & Poor’s cut its rating on the nation.

The S&P GSCI Index of 24 raw materials jumped 3.6 percent, its biggest gain since 2009, at 4 p.m. in New York following last week’s 11 percent slide. Silver futures climbed 5.2 percent and oil rebounded 5.5 percent to above $102 a barrel. The S&P 500 increased 0.5 percent to 1,346.29 as energy and raw-material producers led gains, while the Stoxx Europe 600 Index lost 0.3 percent. Greece’s 10-year note yield rose 21 basis points to 15.71 percent. The euro strengthened 0.4 percent to $1.4367 versus the dollar after gaining as much as 0.9 percent earlier.

Mark Gongloff at WSJ's MarketBeat wonders why markets seemed shocked at the S&P downgrade of Greece.

Financial markets seemed briefly shocked by S&P’s downgrade of Greece this morning, but they shouldn’t have been. The credit-default swap market was warning of just such a downgrade for months...

As far back as January, the CDS market was treating Greece as if it already had the “B” credit rating S&P slapped on it today, according to data provider Markit.

And that still might be too high. Since January, Greece’s implied rating has fallen to CCC, Markit says. Portugal and Ireland are also trading like CCC credits, while Italy is priced like a BBB. The major ratings agencies all have higher ratings on those countries.