Spanish funding costs continue higher

The cost of funding for Spain continues to rise as they sold 10 yr and 15 yr paper. The 10 yr was priced to yield 5.45%, 83 bps above the last one sold in Nov and the 15 yr yielded 5.95%, 141 bps higher than the last one sold in Oct. The existing 10 yr yield is rising to 5.50%, matching the highest since Nov ’00. Germany and France continue to be the main economic salvation in the region as the Euro region mfr’g and services composite index fell .5 pt and was a touch below forecasts. Markit, who publishes the data, said “outside of France and Germany, output growth slowed to near stagnation, registering the weakest performance since Nov ’09, as faster growth of mfr’g products was countered by renewed contraction in services.” The Hang Seng index fell to a 10 week low due to further fixed asset lending constraints in China. S&P did upgrade the credit of China to AA- and Hong Kong to AAA. India kept rates unchanged as expected but they are expected to start hiking again in Jan.

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