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Wednesday, December 28, 2011

Signs of Life in Italy’s Bond Market?

      Certainly don’t want to get too out in front over this but today’s Italian short term bond auction saw yields havled from what they fetched just a month ago.

      “Analysts warned market nerves could easily reignite and pointed to a tougher test on Thursday when Italy will sell up to 8.5 billion euros ($11.1 bln) of longer-term bonds, including three- and ten-year paper.”

     “But the lowest six-month auction yield and strongest bid-to-cover ratio since September added to a sense that some of the tension around the countries now at the center of Europe’s debt problems had eased for a moment.”

     Perhaps the recent injections the ECB has put into European banks has helped for now.

     “Since then the ECB has flooded euro zone banks with almost 500 billion euros of longer-term liquidity and the Rome government has overcome internal opposition to a radical pension reform as part of Italy’s third budget package since the summer.”

      “Spain’s six-month debt costs also more than halved to 2.4 percent at an auction on the eve of the ECB’s bumper tender for three-year money on Dec. 21.”

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