… And not in a good way either.
On Wednesday, Portugal managed to sell all €1bn worth of its planned auction of three-month and 12-month bills. Yields, however, continued their inexorable rise.
The three-month bills were sold at an average yield of 1.818 per cent, compared with 1.595 per cent in the prior auction of the same debt. The 12-month went for a yield of 3.26 per cent, compared with 2.886 per cent prior. Bid-to-cover ratios were 2.2 times for both issues but that’s versus 3 and 2.4 in the prior auctions.
Portugal’s credit default swaps have understandably moved on the news — jumping about 7 basis points to 415bps (Markit). And we’re still waiting to hear the results of the country’s budget vote, though it’s expected to pass later this Wednesday.
Meanwhile in Ireland…
CDS on the emerald island jumped about 22bps on Wednesday, to hover around 545bps. And we hear from Markit that Ireland CDS has seen quotes as wide as 550bps this morning — which would be yet another record. There are rumblings that Ireland is headed towards a general election, following a court ruling that the government must expedite a key by-election.
Belgium, incidentally, was also in the bond market this week
The country auctioned three- and six-month bills on Tuesday at a noticeably increased yield. The three-months bills sold at 0.777 per cent compared to 0.593 per cent in its prior auction — just two weeks ago. The six-month bill went for 0.901 per cent compared to 0.621 per cent previously.
Will the Fed’s upcoming QE2 announcement do anything to cool the temperatures of fretting investors all the way in Europe? Or perhaps ease that (also) rising euro?
Tune in later to find out.
Related links:
Investors’ fear sends yield on Irish bonds to new 7.45pc high - Irish Independent
The ECB exit hurts — hurts like negative €12.6bn - FT Alphaville
And over in Belgium… – FT Alphaville