El Ibex, atento a la deuda y al euro

The financial markets began the week with several open fronts, as the euro fell to 17-month lows against the dollar due to concerns over debt, such as that of France. The Spanish stock market, the Ibex, also aimed to soothe prevailing doubts in Europe, taking into account the upcoming Brazilian election. Debt emerged as a prominent source of unease in financial markets, and as fears about bonds intensified in certain countries, their consequences spread to other markets, like the foreign exchange market.

The euro declined to a new 17-month low against the dollar, dipping below the 1.12 dollar threshold, as its risk premium exceeded 150 points at times. Political uncertainty heightened fiscal concerns, resulting in higher financing costs. Analysts noted that the euro's drops occurred despite expectations of a Fed rate hike, the latest U.S. employment data, released the previous Friday, reducing the odds of a Fed rate increase in October by 25%.

Despite this, the dollar strengthened significantly against the euro. U.S. employment data kept the brakes on interest rates for U.S. debt, with its 10-year bond yield dropping below 5.30%, its highest since 2002. In Europe, the yield demanded on the German Bund indicated little change in the 3.45% range, and the Spanish bond hovered around 4.10%.

Wall Street, following the week's gains, barely benefited from the weaker expectations of a Fed rate hike. Futures traded flat. The Spanish stock market aimed to repeat the downtrend, which had occurred the previous Friday when it broke the 19,000 point barrier and set off a four-day decline. Caution limited the Ibex's efforts to rebound, aiming for levels near 19,100 points.