Financial Markets…Italy’s sovereign credit rating was cut to ‘BBB’ from ‘BBB+’ by Standard and Poor’s due to a weakening of the country’s economic prospects and financial system. S&P also said in a statement the outlook on the rating, two levels above junk status, remains negative. Italy’s benchmark 10-year yield rose 5 basis points to 4.45%, the most since July 3.
Financial Markets…Japan unloaded record amounts of U.S. Treasuries in May amid the steepest monthly loss for the securities in more than three years. Japanese investors reduced a net 3 trillion yen ($30 billion) of their holdings of U.S. government bonds in a fifth consecutive monthly of overall sales that were the biggest on record. Meanwhile, the country’s investors were also net sellers of foreign debt at a record volume of 2.96 trillion yen, pushing year-to-date total to 10.6 trillion yen.
Indices of Nominal US$ Prices, Percent Changes (April 2013 to March 2012).