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Another downgrade for Greece

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The market should shake off news that Standard & Poor's has cut its rating on Greek sovereign debt another two notches to B -- but watch the collateral effects. S&P is really just catching up with Wall Street by lowering its forecasts for Athens' ability to manage its obligations in a world where European interest rates are on the rise. We knew this was coming, and since Greece is already fairly deep in "junk" territory, the impact is more incremental than anything world-changing. Even the prospect that S&P has kept Athens on negative credit watch and so could cut again is not doing much to the credit markets. Nonetheless, the Greek debt crisis -- which has now been dragging on for years -- is shaping up to be the slowest train wreck in history for European banks that hold a lot of Greek debt. Deutsche Bank ( DB , quote ) took a leg down on this news, as did Societe General ( SCGLY , quote ). French and German banks will continue to suffer as the credit rating agencies erode the value of their massive holdings of Greek debt. Needless to say, this is also ultimately a positive catalyst for the dollar. Take a look at DXY and the euro ( quote ) today. The euro bulls ignored this fresh round of trouble for Athens as long as they could, but now the risk factors are coming back to roost. Negative for EU ( quote ), positive for UUP ( quote ).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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