The IS In PIIGS Issue Treasury Bills As Yields Jump, Interest Drops

Tyler Durden's picture

Both Italy and Spain came to market this morning, pricing T-bills for E8.5 billion and nearly E2 billion, respectively. And while there was a divergence in bid to cover trends, yields surged across the board confirming that below the European surface not all is as well as the EURUSD would make most believe. Spain priced EUR 1.163 billion in 3-month T-Bills with a slightly improved bid/cover 4.43 vs. Prev. 4.33 although at a cost of a nearly 50% jump in yield or 1.37% versus 0.899% previously. This is the highest yield since December 2010. Spain also sold EUR 806MM in 6-month Bills at a bid/cover 7.11 vs. Prev. 7.65 with the yield surging as well, this time hitting 1.867% vs. Prev. 1.361%. Italy followed suit issuing EUR 8.5 billion in 6 month Bills, however at a lower bid/cover (reduced interest) of 1.432 vs. Prev. 1.61 despite the yield also jumping to 1.659% from 1.396%. Elsewhere the 3 and 6 month Euribor rate fixings continue to skyrocket, hitting 1.361% and 1.657% respectively. Thank you ECB for hiking rates. All this myopic action has done is to make the cost of short-term debt rolls prohibitively more expensive. Luckily, it will last about 3 months tops before Trichet, just like back in 2008, is forced to loosen once again (and yes, AU priced in EUR will be waiting).

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sinner's picture

Thanks for the headsup. Got a small short on the Dec Eurodollar, that's the only leg of the TED spread I'm willing to enter. Maybe should add an equivalent BEB spread (Bund/Euribor) to the basket and short Euribors?

Id fight Gandhi's picture

Thanks for putting in some late nights the last couple days. Great work.

hugovanderbubble's picture

Tyler look our Subgovernment bonds- Comunidades Autónomas...This is a f...g FARCE

Please Sell Europe now¡


where the hell are those traders...SELL SELL SELL...:)

Welfareisfraud's picture

What is wrong with the ECB increasing rates (they're still pretty damn low)? That it'll expedite the demise of bankrupt social democracies? Well boo hoo.

oogs66's picture

Sounds like Greek front end is blowing out and ireland/portugal front end also a lot weaker.

adeptus's picture

test #2 ignore...

<img src="/sites/default/files/images/user971/imageroot/king%20kong.jpg" width="353" height="348" />