Moody’s downgrades Big Global Banks

In a widely expected move, fifteen global banks were downgraded by the ratings agency Moody’s yesterday evening. Moody's downgrades Big Global BanksBritish banks Barclays, HSBC and RBS saw their credit rating cut by two notches and one notch respectively.

All are likely to respond with reports today defending their credit worthiness in light of the announcement by Moody’s, undoubtedly citing that the reports are backward looking and do not fully reflect current market conditions.

They may have a point as well.

The markets have opened in risk-off mode responding to the downgrades, with equity markets down and the US Dollar regaining ground against Sterling and the Euro.

With the crucial EU summit due at the end of the month and today’s meeting between Germany, France, Italy and Spain also critical, the IMF has used this week to lay out its blueprint of how to save the eurozone.

Much to Germany’s ire, the IMF is pushing for common debt, a European wide deposit guarantee scheme and most crucially in the current climate sovereign bond purchases by the ECB.

Angela Merkel will fight to oppose almost all the measures, but it is getting to the point where only firm and decisive action to place the eurozone on a path towards the IMF reforms is enough to stop the crisis from finally getting to big for politicians to act.

Around the markets today the key data release is the IFO business climate survey which is likely to follow the economic survey from earlier in the week by registering a steep decline.

Wise Money hopes that you have a great weekend.

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