Bonds: Spanish rescue package not enough

Date: Monday 11 Jun 2012

These were the yields and movements on some of the most watched 10-year bonds by the close in Europe:

Spain: 6.49% (+28bp)
Italy: 6.01% (+24bp)
France: 2.56% (+5bp)
Germany: 1.31% (-2bp)
UK: 1.65% (+2bp)
US: 1.59% (-4bp)

They pulled the emergency lever marked “rescue Spain” and, er, things got worse.

Despite the potential €100bn bailout for the Spanish banking system announced on Saturday, debt markets were today betting the rescue package won’t be enough.

Spanish yields soared on fears bond holders will be at the back of the queue if Spanish debt needs to be restructured. Italian yields also rose as investors wondered whether it will be next in line for a bailout.

Predictably German and US bond yields fell as investors looked for safe places to put their money.

BS

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