Higher yields brought out the buyers for Spanish debt

Helped out by the highest yields since July ’08 and a 40 bps jump just this week, Spain successfully sold 10 yr and 30 yr bonds. The 10 yr was sold at a yield of 4.86% up from 4.05% in the last one in May and the b/c was 1.89 vs 2.03 in May. The 30 yr yielded 5.91%, up 115 bps from the last one in Mar and that sharp jump resulted in a b/c of 2.45 vs 1.37 in Mar. The 5% yield level is key because it’s the price where the Euro bailout fund will likely offer its loans. Hungary also sold debt with differing maturities that was met with strong demand but at yields all above 7%. Their successful sale has the Forint at a 2 1/2 week high vs the US$. Also helping sentiment in Europe today in terms of bank transparency is the news from the German Finance Ministry that they will follow Spain and publish the results of last year’s bank stress tests. The pound is at a 5 week high vs the US$ after a much better than expected May UK retail sales figure.

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