Waiting for Spain

In continued anticipation of the Spanish government officially asking for EU/ECB help, the IBEX index is up for a 5th straight day to a 4 month high and the Italian MIB index is as well. Yields for both countries 2 yrs out are also lower for a 4th day. With us all awaiting the likely inevitable request at some point in the next few months, the question remains of how much of the remaining money in the EFSF and soon to be ESM will they allocate to primary bond buys for Spain and how big will the ECB get in the secondary market. The question then following this is whether the decline in yields are sustainable after the money’s been spent as only time is being bought.

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