Well-Received Spanish Debt Sale Could Bolster Risk Sentiment

By David Schutz,

Spain succeeded in raising a total ofEUR 541bln in today’sbond auction, surpassing the maximum target range of 2.5bln. Thehealthy investor appetite for Spanish debt could bolster confidencein the beleaguered Euro and risk-correlated assets. Additionally,Madrid’s apparent ability to get a handleon its debts could help the struggling nation avoid a deeprecession.

But although the auction raised money for the cash-strapped nation, the flush results came at the cost of higher yields. The 10-year benchmark bond’s average yield was 5.789%, compared to 5.403% in January. 2-year securities went at 3.463% versus last month’s 2.07%.

Higher yieldsnotwithstanding, the Tesoro has now reached almost 50% of its 2012funding target, an encouraging development for an economy whichmany see as the Eurozone’s weakest. Concern over the health of Spain’sbeleaguered financial institutions has fueled speculation that theIberian nation will be next in line for a bailout from the Europeanrescue fund. If realized, such a development would make the recentGreek crisis seem like small potatoes given the Spanisheconomy’s relative enormity.

EUR/USD responded to today’s auctionresults with a spike past the pre-auction high of1.3158 . The pair hit 1.3166 beforesubsiding . Bunds, gilts, andSpanish stocks also gained intraday.
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/market_alert/2012/04/19/Well-Received_Spanish_Debt_Sale_Could_Bolster_Risk_Sentiment.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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