By Dave Kansas
As the U.S. stock market flutters around breakeven while digesting the surprisingly strong ADP jobs report for December, the sovereign debt difficulties in Europe continue to percolate.
Today, Portugal sold 500 million euros in six-month bills. This should be a lay-up for most sovereign issuers, requiring barely any yield. But Portugal found itself forced to pay a whopping 3.69% to attract interest. By comparison, Germany pays less than 1% to attract buyers to two-year notes.
In addition, the yield Portugal played was well above the 2.05% it paid on Sept. 10, 2010 in a similar auction.
With Greece and Ireland already in the euro-zone ICU, Portugal is the country that everyone is watching. On the plus side, Lisbon did access the bond markets in a way that Greece and Ireland no longer could. On the negative side, the financing costs ? the yield ? aren?t seen as sustainable in the long run.
The FOMC minutes released Tuesday cited the European debt crisis as one of the major threats to recovery. Even as investors thrill to the sign of possible strong hiring in December, the Old World shows that it may yet haunt in 2011.
This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php
Five Filters featured site: So, Why is Wikileaks a Good Thing Again?.
No comments:
Post a Comment