Here come the strikes, governments put to the test

Today, Greek customs and tax officials will conduct a 48 hour strike, next week there will be a 24 hour civil servant, doctor and Communist backed worker strike that will be followed by a general strike called by Greece’s main union on Feb 24th for 24 hours. This is all in protest to Greece’s new budget and is exactly what other countries will face that will test their will to make tough decisions on spending. The markets continue to have a lack of confidence that these choices will be implemented as sovereign CDS widen out again today and stock markets trade lower, particularly in Portugal, Greece, Spain, Italy and Ireland but even US CDS is up to 50 bps for the 1st time since May ’09. The European concerns has the euro at the lowest level vs the US$ since June ’09. Spain sold 3 yr debt that was well subscribed but at a yield 15 bps above one week ago. Both the BoE and ECB left rates unchanged as expected. US retail comps look good so far.

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