The downgrade of Greece’s credit rating gave pause to the “risk trade” and could send even more buyers into the relative safety of Treasurys through year end.

The dollar strengthened, bonds moved higher and the stock market sold off yesterday as investors fretted about the strength of the global recovery and concerns that Greece’s fiscal problems are the precursor for other global trouble spots.

The Obama administration plans to announce today that it intends to extend the life of the $700 financial bailout fund until next October, administration officials said yesterday. An administration official told CNBC that it will dedicate $175 billion of TARP money to deficit reduction. The amount represents the total the Treasury expects to be repaid by banks through 2010.  The move will leave $140 billion of uncommitted Tarp funds unused, allowing Congress to allocate as it sees fit,presumably for jobs programs.

Today in the UK, the pre- budget report will be delivered by the chancellor at 12.30pm.

The UK market and the European markets are currently flat. US futures markets are pointing to a slightly positive start to trading with the Dow opening up 25 points.

© Brooks Macdonald Asset Management 2009

Sources: Reuters: BBC, Bloomberg, Lawshare, Deutsche Bank (db), Proquote, Financial Times, Wall Street

Journal, CLSA, Sharescope, Market News, Capital Economics, CNBC, Wikipedia.

Please note this report provides a guide to some of the relevant areas that individual investors should consider discussing with an authorised adviser in relation to their specific circumstances, it does not constitute individual advice. As a result no action should be taken or refrained from being taken as a result of its content.