Spanish 10s back below 6%

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Big reversal after trading as high as 6.16% today.

Author: Adam Button

Adam Button is the managing editor of ForexLive™. He was previously the chief currency strategist at XForex and has also worked with Intermarket Strategy. Adam believes there's an edge in knowing every tidbit of news. He was formerly the head of the markets team at the Canadian Economic Press and is a graduate of Ryerson University. Adam lives in Montreal, follow him on Twitter: @FX_Button.

2012-04-16T13:10:09+0000

All|Americas|Market Rumors|Regions

Spanish yields

Adam Button

9 Comments

  1. With or without the help of the ECB?

  2. I don’t think the ECB is going to get involved

  3. Risk on… If the markets ever get back to normal, what ever that is anymore, I think we will all be pretty board in front of our computers.

  4. Adam, here is an idea to end the financial european crisis. It´s about a financial mechanism the ECB must impose:
    The eurozone financial nightmare could be SOLVED VERY EASILY ONCE AND FOR ALL. About euros 400 billion have flown from Italy and Spain to german, dutch and luxembourgeois banks from Feb 2011 to Feb 2012. So this is a FINANCIAL PROBLEM AND NOT A FISCAL ONE. That means that the solution must be a financial one, and NOT a fiscal one. Here are 3 proposals to solve the financial mess, given that the LTRO are very poorly designed, and its medium term consequences are counterproductive. LTRO create an incentive to more capital flight from Italy and Spain to “solid” countries through overabundant liquidity. FIRST SOLUTION: The ECB rules that any EZ bank that receives an amount of euros from another EZ country must reinvest a very hifg percentage of that amount in the country where the funds were originated. SECOND SOLUTION: The funds that abandones Italy and Spain, are now “sleeping” at the “Deposit Facility” in the ECB where more than euros 700 billion were deposited by major banks preferably from Germany, Holland and Luxembourg, banks which are the receipt of the capital flight initiated in Italy and Spain. So the ECB could rule that a high percentage of these funds would be redirected to the central banks of Italy and Spain, in order to be lent to commercial banks there. THIRD SOLUTION: The ECB abolishes completely the “Deposit Facility” and rules a small fee to charge the banks which have a very huge percentaje of excess reserves. So the money returns to the EZ banks, and from that to Italy and Spain. Besides, german, dutch and lux banks would loose any incentive to take money from italian and spanish citizens and firms

  5. Adam, who do you think may be buying? the Banks w LTRO funds?

  6. Adam, would you explain why you feel that way?

  7. Spain is selling 12-month and 18-month bills tomorrow and then 2s and 10s on Thursday, there could be some buying ahead of that as a hedge, there could be real money on the sidelines waiting to buy there.

  8. The ECB got burned on the Greek bond buys. If they do anything it will be more LTROs. Unless there is a panic, they don’t want to get involved.

  9. Walter, you can’t solve the crisis with more regulation. Capital control never worked in the past, so, why do you think they will work this time?

    Now, think why all this money is flying to Luxembourg or Germany. I can tell you, people do not trust spanish banks, since they know that their balance sheets are toxic. So, let’s fix this problem first, and then, people will not have a need to keep their money safe.

    Remember, this happened in Greece last year as well. A lot of people transferred all their money to Switzerland.

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