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For the second straight day, markets are behaving (somewhat) negatively in the wake of the Spanish “bailout” announcement that was made on SaturdayTo recap: On Saturday, Spain announced that it would take a bailout of up to $125 billion from the rest of Europe to recapitalize its banks. Technically, the bailout wasn’t a bailout of the government, so Spain didn’t have to take additional austerity measures.
Initially on Monday markets surged, but the gains collapsed violently — with Spanish bond yields shooting higher — as people began to wonder whether it was enough money, and whether the bailout meant that existing government bondholders were now subordinate.
Well the fears continue. Spanish 10-year yields are now nearing 6.6% according to Bloomberg (at one point early yesterday they had fallen below 6%). Italian yields are up as well.
Both the Spanish and Italian stock markets have gone red. Spain is just barely down, while Italy is off 0.8%.
Other markets, including US futures, are looking better, and are solidly in the Green.