Italy short-term costs halve at auction

• • Dec 28, 2011 6:13am
  • #1
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  • Sara singh

    53 posts

  • Half of rate means good European currency so it make European economic condition may better.It means European economic crisis may solve near future. Well done Europe!!!!!!!!! Half of rate means good European currency so it make European economic condition may better.It means European economic crisis may solve near future. Well done Europe!!!!!!!!!
• • Dec 28, 2011 6:19am
  • #2
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  • TraderUSA

    809 posts

  • Really! not so fast. Really! not so fast.
• • Dec 28, 2011 6:53am
  • #3
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  • Guest

    IP XX.XX.10.136

  • @Sara singh
    How can this be good news?
    
    ECB lent to Eurozone banks money recently under its LTRO facility for a three year period at a rate of 1.00% per annum and the banks are lending the same money to Italy for an annualised rate of 6.5% (3.25% x 2). Also the bonds they purchased is parked with ECB as security for the loan ECB provided.
    
    Market is aware that the Italian bonds would be sold today due to LTRO cash and the important point to note is the risk premia of 5.5% (6.5% - 1%), which is very high compared to, for example, yields of German Bunds and UK Gilts.
    
    The point I want to make is that these auction results do not show that the European economic crisis will be over in the near future. The immediate crisis has been averted by ECB's lending to banks but ECB will not be allowed to do this indefinitely. i-e the crisis has merely been postponed. @Sara singh How can this be good news? ECB lent to Eurozone banks money recently under its LTRO facility for a three year period at a rate of 1.00% per annum and the banks are lending the same money to Italy for an annualised rate of 6.5% (3.25% x 2). Also the bonds they purchased is parked with ECB as security for the loan ECB provided. Market is aware that the Italian bonds would be sold today due to LTRO cash and the important point to note is the risk premia of 5.5% (6.5% - 1%), which is very high compared to, for example, yields of German Bunds and UK Gilts. The point I want to make is that these auction results do not show that the European economic crisis will be over in the near future. The immediate crisis has been averted by ECB's lending to banks but ECB will not be allowed to do this indefinitely. i-e the crisis has merely been postponed.
• • Dec 28, 2011 7:17am
  • #4
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  • bbakker

    6,132 posts

  • Since LTRO day, EUR187 billion of the 210 billion free money has been redeposited at the ECB. Sauce: http://www.zerohedge.com/news/ecb-de...ecord-eur452bn
    
    Also this bond sale was for 6 month notes. As the article states, the real test is tomorrow with 3 and 10 year notes. Since LTRO day, EUR187 billion of the 210 billion free money has been redeposited at the ECB. Sauce: [url]http://www.zerohedge.com/news/ecb-deposits-jump-10-more-record-eur452bn[/url] Also this bond sale was for 6 month notes. As the article states, the real test is tomorrow with 3 and 10 year notes.
• • Dec 28, 2011 8:00am
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  • Guest

    IP XX.XXX.210.93

  • ECB lending money to banks??? No - the ECB fabricated money out of thin air and made an eletronic entry on the banks balance sheet. The ECB has no money to lend. What a con game..... ECB lending money to banks??? No - the ECB fabricated money out of thin air and made an eletronic entry on the banks balance sheet. The ECB has no money to lend. What a con game.....
• • Dec 29, 2011 2:07am
  • #6
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  • UbuFamily

    994 posts

  • con game? con game?
• • Guest

    IP XXX.XX.156.140

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