While US stocks used yesterday’s Spanish budget details as an excuse to bounce after 7 down days in the previous 8, the Spaniards themselves aren’t celebrating as they know the difficulties ahead. The IBEX sold off in the last 20 minutes of its day yesterday when the budget cuts were revealed and its trading down another 1% today. The Spanish 2 yr yield is approaching 3.5% again on the upside and the 10 yr yield is back above 6%. The initial reaction yesterday was that maybe the Spanish news was enough to satisfy any potential conditions brought upon them with an eventual bailout request. Either way, Spain will be asking for help. Noon time we’ll see how much money the Spanish banking system will be thought to need for recaps with 60b euros expected. The ESM though won’t give Spain the money until banking oversight in the Euro zone is up and running and that may not be until 2013. Thanks to energy prices and an increase in the Spanish VAT tax, Euro zone CPI in Sept rose 2.7% y/o/y, above estimates of 2.4% and a 7 month high. In Asia, ahead of a week long holiday, the Shanghai index rallied another 1.5%. The reported quote of the day goes to Washington Nationals manager Davey Johnson who met Ben Bernanke right before the Sept 13th meeting and said “I wanted to ask him if I should get some gold and silver but I bit my tongue.”
