(eToro Blog) Investors had been keenly anticipating yesterday’s Spanish and Italian sovereign debt auctions, worried that yields would rise in 2012 as they did last year. With some clear relief, it was learned that the Spanish auction had easily raised €10 billion, nearly twice its target, with 3-year benchmark bonds selling with a yield of 3.384%. Comparatively, in December similarly dated bonds yielded some 5.187%. One interest rate strategist said that he believed the demand showed at the Spanish auction was an unprecedented success.
The Italian bond auction held yesterday was also deemed a success and helped to buoy not only the Euro but the European bourses. However, analysts caution that the real test is in the 10-year auction sales, seen as a better indicator of investor sentiment. Yesterday, the Italian government sold €12 billion 1-year instruments with a yield of 2.73%, well off the 5.95% of a similar offering in December.
Today’s auction of €4.75 worth of 3-year Italian bonds is also being viewed as a successful one. According to preliminary reports the yield on the 3-year bond fell to 4.83%, well below the 5.62% the government paid last month.
Earlier in the week, the Italian Prime Minister had sent a clear message that the Italian government’s efforts to take control of its finances should be recognized. While the message was directed at the Eurozone’s leadership, it could not help but be heard by investors and credit ratings agencies as a plea for consideration of the efforts and sacrifices that Italy has been making.
On the eToro trading floor, traders are predominantly bullish on the Euro-Dollar, which is currently higher at 1.2789. Trader Pyruss goes with the trend, earlier today opening up several short positions in the EUR/USD pair which he later closed to varying profits, in one case posting a 16% gain.
Copyright 2012 eToro Blog
