The Spanish auction results are out…
RTRS -SPAIN SELLS EU5.64 BLN OF BILLS VS MAXIMUM TARGET OF EU4.5 BLN
RTRS-SPAIN SAYS 3-MONTH BILL AVERAGE YIELD 1.735 PCT VS 5.110 PCT AT PREVIOUS AUCTION
RTRS-SPAIN SAYS 6-MONTH BILL AVERAGE YIELD 2.435 PCT VS 5.227 PCT AT PREVIOUS AUCTION
… and not surprisingly they have put a rocket under the euro.
Now, is it fair to assume that a large bulk of the demand is linked to participants loading up on usable collateral for Wednesday’s three-year LTRO operation by the ECB?
Sure, it Sarko would have wanted.
But there are doubts bills can be used at the 3-year LTRO and that makes today’s demand all the more interesting. Perhaps banks looking to pre-fund for 2012 via the LTRO are looking to park their cash somewhere.