Not sure why they felt the need to wait until 430 since most of it was leaked already. Germany back to stable outlook is good. Austria and France change EFSF but guess that is what LTRO is for. Italy and Portugal would be in trouble in the real world but so long as ECB views them as money good the countries and banks can keep printing money (sorry use LTRO).
The rating change roughly in line with expectations. I think the need to redo the EFSF and ESM concept is an issue that will need to be digested. Is BBB+ for Italy and junk for Portugal enough to cause some collateral provisions to be triggered or force some sellers? I don’t think it will in any meaningful way but needs to be watched.
I’m surprised Belgium got by but then again it is a rating agency.
Will this spur any action by Moody’s and Fitch? In the US they immediately came out in support of the US but Buffett doesn’t seem to care as much about Europe so his employees may be more willing to pile on.
With futures rallying hard after the close it will be curious to see how Europe reacts on Monday and what the markets look like Tuesday morning. Have a great long weekend, and out of sentimental value (and misery loves company) there are at least two index traders that got stopped out on IG7 shorts and flatteners on MLK week back in 2007 at the all time tights 🙂 Always a weird time of year.