April 28 (Bloomberg) -- Stocks slid for a second day and the cost to insure against bond losses rose after credit-rating downgrades of Greece and Portugal fueled concern about sovereign defaults. Greek two-year note yields soared to 21.4 percent. The euro strengthened from a one-year low against the dollar.
The MSCI Asia Pacific Index declined 1.6 percent to 125.20 at 4 p.m. in Tokyo after the Standard & Poor’s 500 Index lost 2.3 percent, the most since February. The Stoxx Euro 600 fell 0.5 percent. The cost of protecting Asian bonds from default jumped to almost a two-month high. The euro traded at $1.3187 from $1.3145 yesterday. S&P 500 futures were little changed.
Stocks, commodities and the euro tumbled, while Treasuries rallied yesterday when S&P lowered Greece’s debt rating to junk and Portugal by two steps. European Central Bank President Jean- Claude Trichet and International Monetary Fund Director Dominique Strauss-Kahn will meet German politicians in Berlin today to promote a financial rescue plan. The euro rebounded on speculation that the IMF will provide more aid to Greece.
And in an Ironic twist:
Greece, Portugal Credit-default swaps on European sovereign debt surged to records. Contracts tied to Greek government bonds climbed 111 basis points to 821 and Portugal rose 54 basis points to 365, according to CMA DataVision.Yields on 10-year Treasuries tumbled 12 basis points to 3.68 percent, the biggest decline since Dec. 17, as investors sought the relative safety of U.S. government debt.
So you have capital fleeing the debt ridden nations of Europe at the exact same time Obama and his buddies are larding up the United States with the exact same systemic problems that destroyed Greece.
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