And here’s the intraday change on the yield of the Spanish 2-year bond, via Bloomberg.
We call it the most important chart in Europe since it’s the short-term sovereign borrowing that does most of the “heavy lifting” for governments in Europe, and it’s the short-term stuff that needs to stay cheap for the governments not to have a blowup.
This weekend, a report came out suggesting that the ECB was preparing to institute caps on the spreads between short-term peripheral debt and short-term German debt, perhaps as early as the September meeting.
This it’s no surprise to see the market snatching this stuff up.
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