Anyone who thought the Spanish bank bailout announcement would be followed by a rally in risk asset prices and a collapse in local government borrowing rates may have been a little too optimisitic.
Indeed, borrowing costs in Spain surged today leaving many wondering if the bailout was doomed to fail.
Indeed, 3 of the last 4 eurozone bailout announcements were followed by an extended period of higher interest rates relative to the German rate. From Thomson Reuters chart god Scott Barber:
Here’s a look at how the Euro banking sector stocks performed during those same periods: