EURO Weathers Another Storm-Where To Now?
Like Columbus, Italy continues to navigate through some uncharted waters. The Italian sovereign debt market faced a major test this morning with the Italian treasury tapping the 5y-bucket for around +€3b and issuing +€2.5b of a new 10-year product. This was never going to be the ideal time for Italy to come to the market amidst post-general election uncertainty. Despite everything, the auctions outcome is being viewed as an early test of market risk appetite following last weekend's inconclusive election results.
The results of the BTP auctions look strong given the circumstances, with good overall bidding and firm covers. The full +EUR6.5b out of the target +EUR4.75-6.5b has been filled. Especially in the 10's bucket, the issue received +EUR6.6b in total bids, well above the +EUR5.2b three-issue average. The results happened to produce the strongest cover for a new 10-year issue in nine-years. The bonds were sold at an average gross yield of +4.83%, up from +4.17% in...
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