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Disastrous Wednesday For EU-More Expected If Troika, Germany Don’T Act Soon-Highlights

|Includes: ERO, EWI, EWP, FXE, SPDR S&P 500 Trust ETF (SPY), UUP

The euro falls to an almost two-year low as Spain's borrowing costs climb, ends day @1.2370

Spanish bond yields are under increased pressure after ratings firm Egan Jones downgraded the country's debt yesterday to B from BB- with a negative outlook, pushing Spanish debt further into junk status. Moody's, Fitch and S&P still rate Spanish debt as investment grade. 10-yr yield +7 bps to 6.483%

Yields on Italian 10-year bonds jump 23 bps and pass 6% after less than stellar bond auction. Spanish yields continue higher--are +21 bps at 6.65%, hitting pre-ECB LTRO levels. Meanwhile, German yields fall to fresh record low of 1.318%.

Italy sells €3.391B of 2017 bonds vs. a target of €3.5B, with the yield rising to 5.66% from 4.86% in April. The demand edges up to 1.35 from 1.34. Italy also sells €2.34B of 10-year bonds vs. target of €2.75B at 6.03% vs 5.84%, with demand 1.4 vs 1.48

Europe should be "realistic," devalue its currency and accept painful reforms so it can emerge from this crisis stronger, says Bank of Thailand Governor Prasarn Trairatvorakul. Thailand experienced this firsthand, shrinking 10.5% in '98 before undertaking radical changes, recovering to average growth of 4% from 2000-2009.

(paraphrased/summarized/quoted from global & fx market currents)

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