Here is the kneejerk Wall Street response to the key event of the day. Funny how the Italians think it was a good auction and everyone else kinda sorta disagrees.
ALESSANDRO MERCURI, STRATEGIST, LLOYDS BANK, LONDON
"Decent even though slightly disappointing (compared) to yesterday's auction. The 2022 bond was well bid, they sold 2.4 billion at the high end of the 2.5 billion range. The key thing that we saw yesterday was that Italian paper still commands a maturity premium. People are still concerned about the credit risk so the longer the maturity the higher they pay. All in all it's a decent reception."
DAVID SCHNAUTZ, RATE STRATEGIST, COMMERZBANK, LONDON
"While yesterday's 6-month bill rates declined to half the levels of the previous auction, today's decline in the auction yield by 'just' about 60 basis points versus end-November in such a high-yield territory underscores that the genuine pressure on Italy is still tremendous, despite bold ECB actions that has given the short ends a big boost.
"Not moving closer to the upper end of the target range is also very unusual for Italy, i.e. not a good sign."
PETER CHATWELL, RATE STRATEGIST, CREDIT AGRICOLE, LONDON
"These have been rather average auctions. The amount sold is 7.02 billion euros versus a 5-8 billion euro range, and the yield improvements we see in the auctions were largely already priced into the secondary market in last week's LTRO-fuelled rally."
ALESSANDRO GIANSANTI, RATE STRATEGIST, ING, AMSTERDAM
"It is slightly positive that they were able to issue the full amount in the 10-year and we have started to see some reduction in yield ... but 7 percent is still a very weak (result).
"The bid to cover ratio in the three-year was weak, but we are 200 basis points below the (yield) level of last month. The rally in the short-term is positive.
"It is also slightly positive that they were able to issue 7 billion given that we are on Dec. 29."