INSIGHTS

On December 05, 2011

European Bond Markets Offer Glimmer of Hope

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Not that we haven’t been whipsawed by the procrastination from European leaders before, but the last week and half of trading in the European bond markets are offering a glimmer of hope that there might be push to come to a resolution.  At this point, there is no sense in calling for the end to their dilemma as all long-standing concerns usually require drawn out solutions.  However, the confirmation today of more austerity measures from Italy coupled with generally better global economic numbers is causing a large rally in Spain and Italy’s sovereign debt. Italy’s 2-year yield has dropped from its high of 7.66% to a current 5.57% while Spain’s 2-year yield has dropped from its high of 6.09% to a current yield of 3.87%.

Italy & Spain 2 Year Government Yields


Ever since the Rich Uncle (Federal Reserve) offered a lifeline of releasing the pressure of a Euro hoarding to the European Banking system, the ECB (European Central Bank) has not ruled out a bigger role in the solution going forward.  The leaders abroad maybe just maybe begin the process of grasping the severity of the situation and thusly lead to an all in solution.

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