The bazooka of a European bailout fund continues to work as Italy capped off a successful week of bond issuance, selling 7b euro’s of debt at maturities of 5 yr, 7 yr and 27 yr. Higher yields are also an enticement as the 5 yr in particular was sold at a yield 34 bps above last months. Also helping European sentiment today was positive earnings comments from Banco Santander and the Spanish IBEX is up 4% in response and the Euro is at its high of the week. Euro 3 mo LIBOR ticked lower for the 1st time this week and US$ 3 mo LIBOR remained about flat for a 3rd week. Italian and Spanish CDS are at 3 week lows. The other market moving factor, the Gulf, is seeing CDS lower this morning in BP, APC and RIG. Loan growth and CPI in China were in line with the leak. Retail Sales were a touch better but IP was a touch light vs expectations. With Chinese CPI now at 3.1%, debt auctions yielding less than 3%, 91 day and 273 day both failed.
