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.
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