Connect to share and comment

Europe is changing. Here's how. A reported blog.

Mixed messages from today's European bond auctions

Italian 10 year bond rates are finally back under 7 percent ... but only just. Meanwhile Hungary looks like the next target of bond markets.
Monti bondsEnlarge
Mario Monti today at a press conference following an auction of 10-year Italian bonds that saw yield prices come down below the danger level of 7 percent (GABRIEL BOUYS/AFP/Getty Images)

Yesterday, Italian 3-year bond interest rates fell sharply and that was good news. Today's auction of 10-year bonds saw rates fall again, to 6.98 percent - down from the record 7.56 percent at last month's auction. But, big but, Italy did not sell all the bonds it hoped to. Around 7 billion euros ($9 billion) worth of 10 year bonds were purchased. 8.5 billion euros ($10.9 billion) is what the Italian government was hoping to sell.

Mario Monti, Italian Prime Minister told journalists, "Auctions held yesterday and today went rather well, but the financial turbulence absolutely isn't over."

The euro is currently trading at its lowest level since January against the dollar at 1.2892, and is at its lowest for a decade against the yen at 100.36 yen.

Also of great concern is Hungary, part of the EU but not in the euro zone. Hungary suspended a sale of three-year bonds today saying the offers it had received were unacceptable. It did sell 10 billion forints ($41 million) of five year bonds at over 9 percent interest. Which makes you wonder if 9 plus percent interest is acceptable what were investors demanding for three year bonds that made the Hungarian authorities unwilling to sell?

http://www.globalpost.com/dispatches/globalpost-blogs/europa/mixed-messages-todays-european-bond-auctions