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Banks Bounce After Uk And Spanish Bond Sales

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http://www.guardian.co.uk/business/marketforceslive/2010/jun/17/1

Spain sold around €3.5bn of 10 year and 30 year bonds, which went well although yields were higher and demand lower than for the previous auction in May. France also sold bonds, in this case just shy of €8bn worth. Meanwhile the UK's auction of £4bn of 2014 gilts was covered 2.28 times.

The successful auctions eased fears that investors would shy away from European bonds because of the current debt concerns. Indeed yesterday's rumours that the EU and IMF were planning a €250bn bailout for Spain - althoughd denied - saw Spanish bond spreadens widen sharply, a bad day all round for the country after its team surprisingly lost to Switzerland at the World Cup. Today sees an EU summit where debt issues will be discussed.

In a note entitled Spain is not Greece Jeremy Batstone-Carr at Charles Stanley said:

Public sector debt is around half of Spanish GDP, making it less than half as important to that economy than that of Greece and one-fifth as severe as Japan's debt mountain. Note that the level of Spain's aggregate debt / GDP ratio is less than that of Germany and France…and Britain.

Spain's problem is simply that financial markets generally are becoming increasingly non-discriminatory and increasingly risk-averse. The facts suggest that Spain should have no trouble financing its deficit and that there should not be a crisis. However, the problems facing the consolidation of the Spanish Cajas appear to have raised the spectre of risk amongst the wider investing community. It is our view that once the Cajas have been consolidated, painful as that process may be, investors may choose to be more discriminatory than they have hitherto proved to be. On balance, we expect the Spanish bond yield curve to flatten in due course.

With the auction news helping sentiment, the FTSE 100 is up 39.10 points at 5277.02. Royal Bank of Scotland has risen 2.17p to 47.34p, Lloyds Banking Group is up 2.33p to 57.86p and Barclays is 10.75p better at 315.6p. The shares were helped by a lack of concrete news on new taxes and break-up plans at last night's Mansion House speeches, while UBS has also issued a buy recommendation on the last two banks.

If you can buy these bonds and immediately dump them on the ECB, it's not surprising they all sold.

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  • 138 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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