The headlines this morning are dominated by news that ratings agency S&P has downgraded Italy’s long-term debt to A from A+, maintaining an outlook negative. This comes as an additional blow to confidence as critical talks between the troika (EU, ECB and IMF) and Greece are already putting pressure on EURUSD and equity markets. The government announced that a further conference call between the sides would take place later today (17:00 GMT), with results of the talks anticipated as early as Wednesday. It seems from these early talks that the troika is willing to release the next instalment of EFSF cash to Greece in exchange for further austerity measures; in line with the speculation that had been swirling yesterday morning. For now, the official message is that talks have been constructive, but in worrying contrast a story published in Greek newspapers suggests
that PM Papandreou is planning a referendum on Eurozone exit, (uuwii) with a bill possibly being pushed through parliament in the coming days. Were it true, such a scenario would certainly throw a spanner in the works and have a devastating effect on financial markets, but thus far the story has not gained much traction.
“small step for man”