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Eurozone crisis live: Recession fears stalk markets again Eurozone crisis live: Recession fears stalk markets again
(40 minutes later)
12.24pm: The focus the eurozone story is increasingly going to zoom in on next Friday's Ecofin meeting in Denmark. As we said earlier (and I'm indebted to our Europe editor Ian Traynor for that entry), the question of how big the euro rescue fund should be will dominate the meeting but there will probably be a compromise to take the fund a bit higher than the €500bn limit the Germans would like and the near-€1 trillion bazooka everyone else wants.
Reuters reports that it has seen a document in Brussels which sets out the options. These are exactly along the lines that we reported earlier but worth reiterating:
Option 1: The EFSF and ESM are combined to create a €940bn fund, minus the money already dished out to Greece, Portugal and Ireland and leaving a fund of €740bn. The Commission hopes such a show of strength would then encourage the US and CHina to stump up more money to the IMF to bolster the rescue effort.
Option 2: Allow the EFSF and ESM to operate independently of one another until the EFSF is wound down next year. That would also equate to a joint-lending capacity of 740 billion euros but only until the EFSF is closed.
Option 3: Disband the EFSF ahead of 2013, making the ESM responsible for all lending, leaving a total lending capacity of €500bn.
An EU diplomat told Reuters: "The question is what Germany might want in return to agreeing to a bigger firewall, be it more austerity from member states, or a German in one of the top posts soon to be vacant in the EU."
11.42am: John Hooper, our Rome correspondent, has been looking at the controversy around Italy's new employment laws, which form the centrepiece of Mario Monti's government's programme for boosting its moribund economy. John writes:11.42am: John Hooper, our Rome correspondent, has been looking at the controversy around Italy's new employment laws, which form the centrepiece of Mario Monti's government's programme for boosting its moribund economy. John writes:
The reforms went to cabinet this morning but there is already evidence it faces a tense and difficult journey to the statute book.The reforms went to cabinet this morning but there is already evidence it faces a tense and difficult journey to the statute book.
Ministers continue to insist that the lady – in this case, Elsa Fornero, the welfare minister and architect of the reform – is not for turning. But the bill is now in a form that allows it to be modified in parliament where the centre-left leader, Pier Luigi Bersani, has already said he wants to see changes.Ministers continue to insist that the lady – in this case, Elsa Fornero, the welfare minister and architect of the reform – is not for turning. But the bill is now in a form that allows it to be modified in parliament where the centre-left leader, Pier Luigi Bersani, has already said he wants to see changes.
Bersani is one of the government's political sponsors. But the pressure on him was stepped up overnight when the second of Italy's three main trade union federations, the Catholic-inspired CISL, shifted its position and said new rules making it easier to fire workers went too far. At the same time, the Catholic bishops' conference has pointedly noted that employees are not "merchandise".Bersani is one of the government's political sponsors. But the pressure on him was stepped up overnight when the second of Italy's three main trade union federations, the Catholic-inspired CISL, shifted its position and said new rules making it easier to fire workers went too far. At the same time, the Catholic bishops' conference has pointedly noted that employees are not "merchandise".
This morning, in an attempt to bolster the position of Italy's 'technocratic' government, president Giorgio Napolitano said he did not expect an "avalanche" of dismissals as a result of the proposed law. An ex-Communist, his views on the subject carry a special weight.This morning, in an attempt to bolster the position of Italy's 'technocratic' government, president Giorgio Napolitano said he did not expect an "avalanche" of dismissals as a result of the proposed law. An ex-Communist, his views on the subject carry a special weight.
Employment security has a sad history of sparking deadly violence in Italy. Advisers on labour market reform to two previous governments were assassinated.Employment security has a sad history of sparking deadly violence in Italy. Advisers on labour market reform to two previous governments were assassinated.
Earlier this week, a demonstrator was photographed wearing a tee-shirt with the slogan "Fornero for the cemetery" . And the news web site Lo Spiffero reported that when the minister went shopping in Turin last weekend, she had an escort of six bodyguards plus four Carabinieri patrol officers to block off the street where she bought herself a pair of shoes.Earlier this week, a demonstrator was photographed wearing a tee-shirt with the slogan "Fornero for the cemetery" . And the news web site Lo Spiffero reported that when the minister went shopping in Turin last weekend, she had an escort of six bodyguards plus four Carabinieri patrol officers to block off the street where she bought herself a pair of shoes.
11.18am: Back to ground zero, aka Athens, where our correspondent Helena Smith says senior government sources are denying that there could be an extension in the deadline for participation in the exchange of bonds regulated by foreign law. Helena writes:11.18am: Back to ground zero, aka Athens, where our correspondent Helena Smith says senior government sources are denying that there could be an extension in the deadline for participation in the exchange of bonds regulated by foreign law. Helena writes:
As was the case for the swap for bonds governed by Greek law earlier this month the deadline will officially end at 8PM GMT.As was the case for the swap for bonds governed by Greek law earlier this month the deadline will officially end at 8PM GMT.
"This is the first I've heard of it [an extension]. I don't think that is going to be the case," said a well-briefed government source."This is the first I've heard of it [an extension]. I don't think that is going to be the case," said a well-briefed government source.
But the merry go round that is the great Athenian rumour mill is nonetheless swirling with talk that the deadline will be extended – if only because there are more than ten Greek bonds governed by foreign law and in each case holders will require a different quorum to decide whether to take up the offer, or not.But the merry go round that is the great Athenian rumour mill is nonetheless swirling with talk that the deadline will be extended – if only because there are more than ten Greek bonds governed by foreign law and in each case holders will require a different quorum to decide whether to take up the offer, or not.
"There is a lot of speculation this morning that it will de prolonged if only for that reason," said another well-placed insider. The public offering was meant to gets off the ground Monday."There is a lot of speculation this morning that it will de prolonged if only for that reason," said another well-placed insider. The public offering was meant to gets off the ground Monday.
Private sector participation in the first round of the debt restructuring hit 85.8 % - a take-up rate that rose to above 97 % when the Greek government activated collective action clauses, or CACS, to force recalcitrant bond holders to participate in the bond exchange.Private sector participation in the first round of the debt restructuring hit 85.8 % - a take-up rate that rose to above 97 % when the Greek government activated collective action clauses, or CACS, to force recalcitrant bond holders to participate in the bond exchange.
11.11am: A couple of readers, including bradfudbantam and Self have pointed out that the share prices are wrong on our website. All I can say is that, without wishing to sound like a recorded announcement on BT or Virgin, our technical experts are aware of the problem and are trying to fix it.11.11am: A couple of readers, including bradfudbantam and Self have pointed out that the share prices are wrong on our website. All I can say is that, without wishing to sound like a recorded announcement on BT or Virgin, our technical experts are aware of the problem and are trying to fix it.
What I can tell you is that the FTSE100 is now down a bit — 8 points to be precise — after the initial excitement caused by BT's pension deal.What I can tell you is that the FTSE100 is now down a bit — 8 points to be precise — after the initial excitement caused by BT's pension deal.
10.58am: It's not just Bond Vigilantes who aren't convinced that all is well in the eurozone. Regulators still need to be convinced that the Greek bailout has solved the eurozone crisis.10.58am: It's not just Bond Vigilantes who aren't convinced that all is well in the eurozone. Regulators still need to be convinced that the Greek bailout has solved the eurozone crisis.
My colleague Jill Treanor points out that the latest evidence of comes from the Financial Policy Committee, the new regulatory body set up inside the Bank of England to look after systemic risk.My colleague Jill Treanor points out that the latest evidence of comes from the Financial Policy Committee, the new regulatory body set up inside the Bank of England to look after systemic risk.
The minutes of its latest meeting, published today, calls on banks to raise their levels of capital "as early as feasible". While watchers of the FPC may feel they have heard this refrain before - as recently as the end of last year when the FPC called on banks to reduce dividends and bonuses if their capital levels were not strong enough, the current message it tougher. This time the FPC is calling on banks to raise capital from external sources - shareholders or bondholders or whatever.The minutes of its latest meeting, published today, calls on banks to raise their levels of capital "as early as feasible". While watchers of the FPC may feel they have heard this refrain before - as recently as the end of last year when the FPC called on banks to reduce dividends and bonuses if their capital levels were not strong enough, the current message it tougher. This time the FPC is calling on banks to raise capital from external sources - shareholders or bondholders or whatever.
The FPC noted that banks had been managing to tap bond markets, despite the crisis in the eurozone. The report says:The FPC noted that banks had been managing to tap bond markets, despite the crisis in the eurozone. The report says:
The committee agreed, however, that conditions remained fragile. While the ECB's operations had alleviated some of the immediate tensions, questions remained about the indebtedness and competitiveness of some European countries. Banks with large exposures to those countries where risks of persistent low economic growth and potential credit defaults remained high should be particularly alert to the need to build capital.The committee agreed, however, that conditions remained fragile. While the ECB's operations had alleviated some of the immediate tensions, questions remained about the indebtedness and competitiveness of some European countries. Banks with large exposures to those countries where risks of persistent low economic growth and potential credit defaults remained high should be particularly alert to the need to build capital.
The Committee had recommended in November that, given the exceptionally threatening environment, if earnings were insufficient to build capital levels further, banks should limit distributions and give serious consideration to raising external capital in the coming months. Following this recommendation, the FSA had discussed with the largest UK banks how best they might build capital in the short term. Some progress had been made by the banks in meeting the Committee's recommendation. In 2011, variable remuneration paid in the form of cash had fallen in four of the five largest UK banks that had reported and by 17% in total at those banks. Aggregate nominal capital at the three largest UK banks that did not have a significant element of public ownership had increased by over £1.5 billion in the second half of 2011.The Committee had recommended in November that, given the exceptionally threatening environment, if earnings were insufficient to build capital levels further, banks should limit distributions and give serious consideration to raising external capital in the coming months. Following this recommendation, the FSA had discussed with the largest UK banks how best they might build capital in the short term. Some progress had been made by the banks in meeting the Committee's recommendation. In 2011, variable remuneration paid in the form of cash had fallen in four of the five largest UK banks that had reported and by 17% in total at those banks. Aggregate nominal capital at the three largest UK banks that did not have a significant element of public ownership had increased by over £1.5 billion in the second half of 2011.
Nevertheless, the Committee remained concerned that capital was not yet at levels that would ensure resilience in the face of the prospective risks. It therefore agreed on the need for banks to continue to restrain cash distributions, including via share buybacks. But the scope to build capital through this route was limited. It therefore advised banks to raise external capital as early as feasible.Nevertheless, the Committee remained concerned that capital was not yet at levels that would ensure resilience in the face of the prospective risks. It therefore agreed on the need for banks to continue to restrain cash distributions, including via share buybacks. But the scope to build capital through this route was limited. It therefore advised banks to raise external capital as early as feasible.
In other words, there's a storm coming.....In other words, there's a storm coming.....
10.42am: Yields on benchmark 10-year Spanish bonds are still up today — they're currently running at 5.482%, arise of 0.043 points — and the spread with German bunds has climbed to 358 basis points, the highest level since January.10.42am: Yields on benchmark 10-year Spanish bonds are still up today — they're currently running at 5.482%, arise of 0.043 points — and the spread with German bunds has climbed to 358 basis points, the highest level since January.
There's also this scary tweet from the Bond Vigilantes which suggests that things might be hotting up again, crisis-wise.There's also this scary tweet from the Bond Vigilantes which suggests that things might be hotting up again, crisis-wise.
Markets already betting heavily on next Greek default - yields on new PSI Greek bonds 3% higher, prices have plunged from ≈25 to below 20Markets already betting heavily on next Greek default - yields on new PSI Greek bonds 3% higher, prices have plunged from ≈25 to below 20
— Bond Vigilantes (@bondvigilantes) March 23, 2012— Bond Vigilantes (@bondvigilantes) March 23, 2012
9.39am: This just in from our man in Brussels Ian Traynor.9.39am: This just in from our man in Brussels Ian Traynor.
Jürgen Stark, pillar of the German monetarist orthodoxy who quit as the ECB's chief economist in protest at handling of euro crisis, says Draghi's policy of quantitative easing or flooding EU banks with cheap three-year loans, will end in tears. The more common view is that if anything has saved the euro, it is Draghi's policy.Jürgen Stark, pillar of the German monetarist orthodoxy who quit as the ECB's chief economist in protest at handling of euro crisis, says Draghi's policy of quantitative easing or flooding EU banks with cheap three-year loans, will end in tears. The more common view is that if anything has saved the euro, it is Draghi's policy.
The trillion euros doled out in two months can't be absorbed quickly enough by the banks, Stark warns in an interview with Germany's business paper, Handelsblatt.The trillion euros doled out in two months can't be absorbed quickly enough by the banks, Stark warns in an interview with Germany's business paper, Handelsblatt.
"Historically we know that every particularly strong expansion of the central bank's balance sheet leads to inflation in the medium term.""Historically we know that every particularly strong expansion of the central bank's balance sheet leads to inflation in the medium term."
He demands an ECB exit strategy from the liquidity policy, echoing demands from Bundesbank boss Jens Weidmann.He demands an ECB exit strategy from the liquidity policy, echoing demands from Bundesbank boss Jens Weidmann.
9.30am: Today is the deadline for participation by holders of Greek bonds covered by foreign law in the bond swap. There are suggestions that it could be extended again. Surprise, surprise.9.30am: Today is the deadline for participation by holders of Greek bonds covered by foreign law in the bond swap. There are suggestions that it could be extended again. Surprise, surprise.
9.28am: Italian retail sales have come in better than expected, rebounding by 0.7% in January from December. In December, sales were down 0.8%.9.28am: Italian retail sales have come in better than expected, rebounding by 0.7% in January from December. In December, sales were down 0.8%.
9.19am: Finally some good news. Bank of England policy maker Martin Weale reckons the British economy probably grew in the first three months of this year and will escape a double dip. In an interview with the Bath Chronicle, he also said he expected normal economic growth to resume over the medium term - although that doesn't ncessarily mean we'll make up lost ground, he was quick to add.9.19am: Finally some good news. Bank of England policy maker Martin Weale reckons the British economy probably grew in the first three months of this year and will escape a double dip. In an interview with the Bath Chronicle, he also said he expected normal economic growth to resume over the medium term - although that doesn't ncessarily mean we'll make up lost ground, he was quick to add.
In the first quarter of htis year things have been better than I'd anticipated. I think it's more likely than not that growth will be positive.In the first quarter of htis year things have been better than I'd anticipated. I think it's more likely than not that growth will be positive.
Looking ahead, we'll have quite a bit of disruption to the data because first we have the Diamond Jubilee, then the Olympics. The numbers, I'm sure, will jump around and it will be difficult to know what to make of them until we have a more stable picture late this year, and maybe not until the first quarter of next year.Looking ahead, we'll have quite a bit of disruption to the data because first we have the Diamond Jubilee, then the Olympics. The numbers, I'm sure, will jump around and it will be difficult to know what to make of them until we have a more stable picture late this year, and maybe not until the first quarter of next year.
Over the medium term I do expect what I'd call normal economic growth to be resumed, but normal economic growth is very different to making up the ground we've lost over the past four years.Over the medium term I do expect what I'd call normal economic growth to be resumed, but normal economic growth is very different to making up the ground we've lost over the past four years.
9.05am: Senor de Guindos's intervention also gives us the opportunity to use this amazing picture, below, from the EU summit earlier this month. Of course, Juncker was only joking wasn't he? I mean he doesn't really want to strangle the finance minister of the country whose rickety banks could potentially destroy the euro, does he? But please feel free to suggest some caption bubbles.9.05am: Senor de Guindos's intervention also gives us the opportunity to use this amazing picture, below, from the EU summit earlier this month. Of course, Juncker was only joking wasn't he? I mean he doesn't really want to strangle the finance minister of the country whose rickety banks could potentially destroy the euro, does he? But please feel free to suggest some caption bubbles.
8.57am: Spain's bond yields are up very slightly this morning after their spike yesterday and the finance minister Luis de Guindos has popped up in Singapore to tell us that his country is fully committed to meeting its deficit targets.8.57am: Spain's bond yields are up very slightly this morning after their spike yesterday and the finance minister Luis de Guindos has popped up in Singapore to tell us that his country is fully committed to meeting its deficit targets.
"We are fully committed with the targets," he told reporters on a trip to Asia, according to Reuters, referring to Spain's commitment to reduce its budget deficit to 5.3% of GDP this year and 3% next year."We are fully committed with the targets," he told reporters on a trip to Asia, according to Reuters, referring to Spain's commitment to reduce its budget deficit to 5.3% of GDP this year and 3% next year.
This follows alarm in Brussels and elsewhere earlier this month after prime minister Mariano Rajoy said that Spain would relax its targets.This follows alarm in Brussels and elsewhere earlier this month after prime minister Mariano Rajoy said that Spain would relax its targets.
De Guindos said today that any comparisons with Greece were "total nonsense" as the new Spanish government had, in its three months in office, slashed costs and passed key labour market reforms that were key to creating jobs and helping firms become more productive.De Guindos said today that any comparisons with Greece were "total nonsense" as the new Spanish government had, in its three months in office, slashed costs and passed key labour market reforms that were key to creating jobs and helping firms become more productive.
"This is a very important reform that the markets will have to assess positively," he said of the labour measures that were passed last month."This is a very important reform that the markets will have to assess positively," he said of the labour measures that were passed last month.
8.32am: With concern building about the waning effect of the LTROs, there's going to be a lot of talk about the meeting in Copenhagen this time next week of EU finance ministers - known as Ecofin - and at the same time eurozone finance ministers.8.32am: With concern building about the waning effect of the LTROs, there's going to be a lot of talk about the meeting in Copenhagen this time next week of EU finance ministers - known as Ecofin - and at the same time eurozone finance ministers.
It's not strictly speaking a summit but seems set to be a crucial gathering because on the agenda is deciding how big the eurozone rescue fund should be. The European Commission wants to combine the eurozone's temporary bailout fund, the European Financial Stability Facility, the devilishly acronymed EFSF, with the future permanent fund which comes into existence this year - the European Stability Mechanism, or ESM for short - bringing the total to €940bn.It's not strictly speaking a summit but seems set to be a crucial gathering because on the agenda is deciding how big the eurozone rescue fund should be. The European Commission wants to combine the eurozone's temporary bailout fund, the European Financial Stability Facility, the devilishly acronymed EFSF, with the future permanent fund which comes into existence this year - the European Stability Mechanism, or ESM for short - bringing the total to €940bn.
Basically, the Germans don't want to do this. The furthest they will go is to temporarily merge both till next year when EFSF expires, giving a year at around €750bn then back down to €500bn. Everyone else is worried that won't be enough to calm the markets now that Mario Draghi has told everyone not to expect any more cheap loans.Basically, the Germans don't want to do this. The furthest they will go is to temporarily merge both till next year when EFSF expires, giving a year at around €750bn then back down to €500bn. Everyone else is worried that won't be enough to calm the markets now that Mario Draghi has told everyone not to expect any more cheap loans.
8.22am: The FTSE100 is now up nearly 19 points, or 0.33% at 5864, despite this blog's pessimism, but it's still on course for its worst week of 2012. Germany's Dax and France's Cac are also up slightly.8.22am: The FTSE100 is now up nearly 19 points, or 0.33% at 5864, despite this blog's pessimism, but it's still on course for its worst week of 2012. Germany's Dax and France's Cac are also up slightly.
Having said that fear was returning to the markets, what I meant was that there's a wider feeling that lack of growth will rein in the optimism that has characterised the markets so far this year. Here's Gary Jenkins of Swordfish:Having said that fear was returning to the markets, what I meant was that there's a wider feeling that lack of growth will rein in the optimism that has characterised the markets so far this year. Here's Gary Jenkins of Swordfish:
The worst is over…" according to ECB President Mario Draghi so I guess we can all breathe a big sigh of relief and learn how to stop worrying and love the bonds…Of course Mr Draghi has to make such comments because if he was quoted as being overly negative then it could all become self-fulfilling.The worst is over…" according to ECB President Mario Draghi so I guess we can all breathe a big sigh of relief and learn how to stop worrying and love the bonds…Of course Mr Draghi has to make such comments because if he was quoted as being overly negative then it could all become self-fulfilling.
The fact is though that Portuguese and Spanish bond yields are back to where they were before the injection of close to €1tn into the system via LTROs and the European economic data is worse than expected. To be fair Italian bond yields have improved significantly recently but that trend may well come to a halt if concerns start to mount about the debt sustainability of Portugal and Spain.The fact is though that Portuguese and Spanish bond yields are back to where they were before the injection of close to €1tn into the system via LTROs and the European economic data is worse than expected. To be fair Italian bond yields have improved significantly recently but that trend may well come to a halt if concerns start to mount about the debt sustainability of Portugal and Spain.
With all the emphasis on the impact of weak economic data on sovereigns it might be easy to overlook the potential impact upon corporate credit quality. Whilst corporates have been a shining beacon of hope over the last few years partly thanks to the action they took at the start of the crisis if the weak economic data becomes a trend then at some stage the credit quality indicators will deteriorate and the safe haven status may be impacted. That said if the data is still disappointing by the time we get to the 3rd quarter then we might well be looking at further stimulus packages…With all the emphasis on the impact of weak economic data on sovereigns it might be easy to overlook the potential impact upon corporate credit quality. Whilst corporates have been a shining beacon of hope over the last few years partly thanks to the action they took at the start of the crisis if the weak economic data becomes a trend then at some stage the credit quality indicators will deteriorate and the safe haven status may be impacted. That said if the data is still disappointing by the time we get to the 3rd quarter then we might well be looking at further stimulus packages…
8.04am: The FTSE100 in London has opened up slightly, at 5854 points, a rise of 0.15%, helped by BT's announcement that it has reached a deal with its pension trustees over the deficit.8.04am: The FTSE100 in London has opened up slightly, at 5854 points, a rise of 0.15%, helped by BT's announcement that it has reached a deal with its pension trustees over the deficit.
But the tone of the morning commenst from our usual battery of City commentators is on the cautious side. As Michael Hewson of CMC Markets puts it:But the tone of the morning commenst from our usual battery of City commentators is on the cautious side. As Michael Hewson of CMC Markets puts it:
Yesterday's disappointing economic data from France and Germany saw concerns about growth in Europe push back near to the top of the agenda as 10-year bond yields in Italy and Spain started to edge back higher again, above the 5% level, bringing the recent rise in equity markets to a shuddering halt. This has raised concerns that the recent good run in equity markets could be over and we could be heading back down again.Yesterday's disappointing economic data from France and Germany saw concerns about growth in Europe push back near to the top of the agenda as 10-year bond yields in Italy and Spain started to edge back higher again, above the 5% level, bringing the recent rise in equity markets to a shuddering halt. This has raised concerns that the recent good run in equity markets could be over and we could be heading back down again.
With Belgium, the Netherlands, Italy, Portugal, Greece and now Ireland in recession, concerns about the ability of Europe to prevent a contagion effect are beginning to resonate once more in Brussels, ahead of next week's European finance ministers meeting in Copenhagen.With Belgium, the Netherlands, Italy, Portugal, Greece and now Ireland in recession, concerns about the ability of Europe to prevent a contagion effect are beginning to resonate once more in Brussels, ahead of next week's European finance ministers meeting in Copenhagen.
Michael also mentions that pressure is now growing on Germany to agree to creating a bigger firewall around the euro at next week's meeting of finance ministers in Copenhagen. but more on that shortly.Michael also mentions that pressure is now growing on Germany to agree to creating a bigger firewall around the euro at next week's meeting of finance ministers in Copenhagen. but more on that shortly.
7.44am: Good morning and welcome to the eurozone crisis live blog.7.44am: Good morning and welcome to the eurozone crisis live blog.
After a couple of quieter weeks there are signs that fear is creeping back into the system. Thursday's surveys of manufacturing across the eurozone have given everyone the heebie jeebies, it would seem, with the Nikkei index in Japan experiencing its worst day for two months overnight.After a couple of quieter weeks there are signs that fear is creeping back into the system. Thursday's surveys of manufacturing across the eurozone have given everyone the heebie jeebies, it would seem, with the Nikkei index in Japan experiencing its worst day for two months overnight.
And a front page story in the FT flags up the threat of rising borrowing costs in Spain where poor growth forecasts pushed 10-year bond yields up to 5.53%. The report also suggested that one of the reasons for was that the positive effects of the ECB's cheap loans to banks over the past few months – so-called longer term refinancing operations, or LTROs – were wearing off.And a front page story in the FT flags up the threat of rising borrowing costs in Spain where poor growth forecasts pushed 10-year bond yields up to 5.53%. The report also suggested that one of the reasons for was that the positive effects of the ECB's cheap loans to banks over the past few months – so-called longer term refinancing operations, or LTROs – were wearing off.
Marc Chandler, currency strategist at Brown Brothers Harriman, noted Italian 10-year yields have fallen 180 basis points so far this year while Spain's have risen by 39bp.Marc Chandler, currency strategist at Brown Brothers Harriman, noted Italian 10-year yields have fallen 180 basis points so far this year while Spain's have risen by 39bp.
"That is after two LTROs," he said. "That definitely concerns me. When the bonds rally it helps the banks' balance sheets. But when yields start rising it hurts the banks even more. It is a vicious circle.""That is after two LTROs," he said. "That definitely concerns me. When the bonds rally it helps the banks' balance sheets. But when yields start rising it hurts the banks even more. It is a vicious circle."