Chillin' out till it needs to be funded
After barely three months of 2012, the European Fixed Income vote of no confidence continued to strike terror in investors’ hearts with the flurry of bad news in Economic Data thru February and march translating to investors s staying away from the day’s 10-Y Bund Auction. Meanwhile Italian Bills worth EUR 11 bln were signed on by investors and tomorrow’s Italian auction will still be watched with much trepidation. 10Y yields in germany ticked to an abysmal 1.63% even as the Auction was closed out at 1.77%.
Both the rate rises in Italian and Spanish debt which had receded for a short time earlier in the day and the receding depressed German yields point to increasing stresses in European wholesale financing marketsas fundamental non performance of Economic projections widen the cracks in confidence for a currency amalgamated across 17 independent economies though the unified currency will again bring the Euro system back to a painful yet happening recovery esp as Italy and Ireland perform with confidence and the Target 2 system continues to absorb the lower paying capacity of the South with continued trade.
Germans sold less than EUR 4 bln at the auction settling for EUR 3.87 bln at 1.77% even as bids of EUR 4.11 bln would not cover the EUR 5 bln target for the auction. The trail of lack of ?confidence will probably be shored up only if industrial production and the trade surplus catch back to a hgher export rate esop in Capital equipment as Germany is not made for flecible interchanging fo another category of exports relying on larger unit exports to the South Europe and the Eastern states and Asia and USA for its growth