Earlier this week, sovereign debt jitters gripped the markets. What’s changed?
Three successful auctions in Portugal Spain and Italy as well news that the European bailout fund will likely be increased…Japan said they would buy 20% of ESFS bonds and China said they would buy chunks as well…
Doesn’t change the macro picture that many EU countries have large, difficult to finance debt burdens (even Greece and Ireland, who’ve already been bailed out) very much but it is enough to change the imminent fear (hope?) of collapse…
Also Trichet’s inflation focus was a complete surprise to the market…
In the end, the market was very short Euros and got caught, but the news flow spurred the rethink…
