Fears of ‘Lehman-style event’ loom large
Weak economic data in the US added to fears that the country could plunge back into recession, while Spain and Italy moved closer to failing to pay their debts. A drop in consumer spending and manufacturing orders in America came as traders digested the potential impact of vast spending cuts, drawn up as a part of a deal to lift the country’s debt limit.
Meanwhile, escalating bond yields in Spain and Italy — seen as a sign of plummeting confidence in a country’s finances — lifted the likelihood that both countries would follow in the footsteps of Greece and Ireland and require a multi-billion bailout from the EU.
