Talk of a larger EU bailout fund seems to have calmed European bond markets…Portuguese spreads have fallen back below 400 bp…now at 396 bp from 402 earlier in the day (using Bloomberg data). Portuguese 10-year bonds are back below 7%, a level some sees as a line in the sand for government financing. Above that level it becomes very difficult for Portugal to fund its debt burden…
T%he ECB has been a buyer of Portuguese debt today. Perhaps they stepped up the pace of buying from last week’s very small amounts…
EUR/USD is rebounding, now at 1.2955 from 1.2904 lows.
