Week Feb 4 2011 – Weekly Recap & The Week Ahead
“The greatest safety lies in putting all your eggs in one basket and watching the basket” — Gerald M. Loeb
1. Moody’s downgrades Egypt’s bond ratings — Moody’s Investors Service on Monday downgraded Egypt’s government bond ratings, citing the sharp increase in political risk following several days of anti-government protests.
2. Court rules against healthcare reform — a federal judge in Florida became the second U.S. judge to declare the healthcare reform law unconstitutional, marking the biggest legal challenge yet to federal authority to enact the law.
3. S&P cuts Ireland — S&P cut Ireland’s credit rating to A-/A-2 from A/A-1 this morning, and maintains a negative outlook uncertainty over how much additional capital the country’s banks will need.
4. Fed passes China on Treasury holdings — the Federal Reserve is now the top holder of Treasury securities, pushing China to the number two slot. According to recent data, the New York Fed’s holdings of Treasurys in its System Open Market Account total $1.1T vs. China’s $896B holdings and Japan’s $877B.
5. Debt ceiling debacle delayed, a little — the U.S. is on track to hit its $14.29T debt limit by the end of May, slightly later than originally forecast because tax revenues have been stronger than expected. Lawmakers from both sides of the aisle agree a default would be a ‘financial disaster,’ and an increase in the debt ceiling is nearly guaranteed, but Republicans (and some Democrats) are demanding cuts in government spending as the price of approving an increase.
6. Fitch downgrades Egypt credit ratings — Fitch’s more pessimistic stance on the Egyptian government’s ability to pay its sovereign creditors follows ratings cuts by Standard & Poor’s and Moody’s Investors Service. Fitch now pegs Egypt’s long-term foreign-currency issuer-default rating at double-B instead of double-B-plus. The outlook is negative.
The week ahead — Economic data from Econoday.com:
