The white-hot financial spotlight is aimed again on European sovereign debt.
Standard & Poor's this week downgraded Greece's debt to "CCC," and Reuters reports that Moody's credit rating put France's top three banks on review for a possible downgrade due to their exposure to Greek debt.
Contagion fears loom. The Wall Street Journal (5/15) quotes a London representative of a major financial house:
"The risk of a vicious spiral of sovereign and bank credit downgrades points to growing financial distress as the risk of a disorderly Greek default looms large."
Greece's 10-year bonds have recently traded at more than 17.5 percent. (Bondholders want more yield in exchange for taking on risky bonds.)
But three months ago -- well before the current round of headlines about the sovereign debt crisis -- our
European Short Term Update forecasted higher yields for some debt plagued European countries.
One example is the Spanish 10-year bond. Here's the chart subscribers saw on March 11, 2011 -- forecasting the yield to drop and then move upward from a completed "triangle" formation:
Next is a chart from March 22, 2011, which showed subscribers the forecast for yields on the Spanish 10-year bond:
As you can see, the yield moved to the bottom of the triangle's trendline before starting to make a move upward -- just as forecast in our
European Short Term Update.
Since the publication of that second chart, Spanish 10-year bonds are yielding around 5.5 percent -- having moved higher, also as forecast.
We use the Elliott Wave Principle and complimentary technical tools -- because if you wait for the "news" to happen, well, it's too late to publish a forecast.