A Buffet Of Negative News Haunts Major Financial Markets

Major financial markets seem to be either in a state of confusion (looking for anything to justify current actions) or are have been seeing widening of cracks that may turn into a collapse.

While yesterday's news where the sharp decline in Wall Street was linked to anaemic job data, in Europe, market anxiety has been allegedly from Hungary's politics.

This from Bloomberg,

``Credit-default swaps on sovereign bonds surged to a record on speculation Europe’s debt crisis is worsening after Hungary said it’s in a “very grave situation” because a previous government lied about the economy...

``Hungary’s bonds fell after a spokesman for Prime Minister Viktor Orban said talk of a default is “not an exaggeration” because a previous administration “manipulated” figures. The country was bailed out with a 20 billion-euro ($24 billion) aid package from the European Union and International Monetary Fund in 2008."

Bespoke Invest rightly points out that it isn't Hungary, but Spain which appears to be feeling the heat, as shown by the activities in the sovereign Credit Default Swaps markets.

Bespoke Invest writes,

``Sovereign debt worries in Europe have been elevated for a couple of months now, and today Hungary moved into the crosshairs. Sovereign debt default risk as measured by 5-year CDS prices has spiked for Hungary and the countries surrounding it today, but default risk for this region still remains well below levels seen in late 2008 and early 2009. The first two charts below of 5-year CDS for Austria and Hungary since 2008 highlights this. Greece and Portugal default risk remains elevated as well, but at the moment it is still down from its recent peaks. France also remains elevated, but it is still below highs seen in early 2009. The same can't be said for Spain, however. Spain default risk reached a new crisis high today, taking out levels seen prior to the trillion Euro bailout. And Spain matters much more than Hungary."

So like in a buffet, the link between bad news and falling markets seems a matter of choice. Take your pick: US Jobs data, Hungary or Spain? Or perhaps, the latest fashion of lengthy hemlines hold the key?