Spain's credit rating was cut on Wednesday, this time by Moody's. The latter announced that Spain's rating has been cut from A3 to Baa3, just one level above junk, and is on review for further downgrade.
Spain will not go down without a fight though. From Bloomberg on Wednesday:
Spanish Prime Minister Mariano Rajoy said today he’ll “battle” central bankers refusing to buy debt from peripheral nations. Rajoy published a letter to European Union leaders calling for the European Central Bank to buy debt from the countries struggling to shore up their finances.
“That is the battle we have to wage in Europe,” Rajoy told the Spanish parliament in Madrid today. “I am waging it.”
Tim Duy, who expects further easing by the Federal Reserve, also supports Rajoy's battle with the ECB.
Honestly, I find it incomprehensible to believe that the ECB will not soon come to the aid of Spain and Italy with additional bond purchases. Only the most irresponsible policy body would take such a risk...
No wonder Mike Dolan of Reuters sees “many more years of money printing” from the world's big four central banks.
Meanwhile, negative economic data further soured the mood on Wednesday.
Euro-area industrial production fell 0.8 percent in April, its second consecutive decline.
US retail sales fell 0.2 percent in May, also a second consecutive decline.
However, Japan had good news to report. Core machinery orders there rose 5.7 percent in April, much better than expected.
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