Expansión is reporting that this morning's completion of an auction of three-year debt by the Bank of Spain resulted in a very high 3.39% average yield and a bid-to-cover of 2.1. The secondary market's immediate reaction can be seen in the screen grab from Bloomberg on the left. Currently at 3.036%, that is a 23 bps reduction since today's open.---------------------------------
2 Comments:
Buy the bonds cheap at the auction and then sell them to the ECB.
It's easier than changing the law and letting the ECB bid on government bonds directly.
It would be interesting if the same thing were to happen in reverse at the Bund auction.
What with a one-sided news flow struggling to find correspondence with the real world and Edward going platinum, my guess is the switch flips over right about now.
There are going to be some mighty lumps taken on those bunds bought at 2.50.
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