So much for convincing investors that Europe is fixed.
The European Central Bank’s latest monetary policy decision—a 25 bps rate cut—hasn’t bolstered confidence, either.
UPDATE: Markets across Europe are tanking, with Spain taking the biggest hit. Italy is not far behind. A quick look at the scoreboard:
German DAX: -1.2%
French CAC 40: -1.6%
Italian FTSE MIB: -3.0%
Spanish IBEX 35: -3.5%
The IBEX 35 is just getting destroyed:
Photo: Yahoo Finance
Even more worrisome is the fact that borrowing costs are shooting higher for Spain and Italy. The Italian 10-year crossed the important benchmark of 6 per cent.
But the rise in yields is particularly important for bonds with maturities of less than three years, or before the expiration of the two game-changing LTROs from the ECB.
We’ve been following the Spanish two-year as a good indicator of this stress—our “Most Important Chart In Europe”—and it’s up 53 basis points today to 4.61 per cent:
Background…ECB CUTS RATES BY 25 BPS TO 0.75% >