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You didn't forget about Spain did you? In fact, before that rancid US employment report hit futures were headed lower anyway as 10-year Spanish bond yields broke back above that 7% psychological danger zone. I think part of was lingering disappointment that the ECB wouldn't do more to help the EU banking system, and also from a flash headline from an EU source that was doubtful that the proposed direct bank recapitalizations would go through. Ay caramba!
Consequentially, Spain's IBEX 35 index was off more than 3% Friday and guess what; that means it has now erased all the previous gains made after that EU summit. While many initially felt Chancellor Merkel "blinked" at the EU summit, a second look shows that she actually continues to stand firm. This week, she's been quoted as saying that none of the bailout rules have been changed since the summit. And so the questions on Spain's banking system have been rekindled.
On the NYSE, BBVA (BBVA) and Banco Santander (SAN) were down more than 4% each. They are down approximately 12% and 10%, respectively in the past two days.
Add together the ideas that EU debt is back under the microscope and that the US jobs data, while bad, wasn't quite bad enough to spark QE3, and we get a euro that's down 0.9% to a 2-year low against the dollar.
EUR/USD - 3 year
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