The Banking and Strategy Initiative

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Back to the crisis: Panic hits Spain

Spanish 10 Y yields are up 25 bp to 5.64% in one day of trading and nearly 50 bp in March 2012 as traders burnt in the last stand off before LTRO hit in November rush to exit positions in Spanish sovereigns esp as books are probably clean and green after a good Q1 this time With LTRO funds having been used for auctions, interest was waning in further buying and FM Cristobal’s warnings with Mariane Rajoy making grounds for his predecessor government’s failure set up today’s 5Y Auction for failure.

ECB and BoE, as expected, kept policy rates unchanged at 1% and 0.5% respectively, RBA looking brave at keeping rates at 4.25% a bit high after two consecutive deficits and a flatlining of exports to China continue as base case scenario for 2012.

The short weekend is probably not helping the mindset esp as carrying over a weak position in case the US jobs report throws up a wrench or yields spiral out of control could take precedence for investors even as no Margin calls have been reported in Spain. German Bunds rallied again after the Auction devolved almost and the government walked away with EUR 2.589 bln in bonds sold at the spiked yields.

Australia reported a second consecutive trade deficit showing lack of exports to China picking a $1.6 bln gap in the February trade figures to a A$480 mln deficit RBA standing up to the onslaught maintaining the 4.25% rate as the bottom Banks were improving in Australia even as Asian banks have picked up new licences and started lending while Aussie biggies happy without a rate cut and deleveraging with their European counterparts not turning any additional business their way.

Meanwhile Central Banks in Asia were happya s Gold broke down after FOMC minues revealed there wn’t be any more funding jujubes or Quantitative Easing. The dollar is back in strength though in response to the weakness in commodities while the EUR is down to 108 against the Yen

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This entry was posted on April 4, 2012 by in Amitonomics, Banking, European Sovereign Debt crisis, US.

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