10-åringarna i PIIGS fortfarande rekordhöga

Med Redburns ord:

Credit markets don’t seem to believe the equity rally. Over the past few days we’ve seen a substantial rally in Spanish banking shares, probably a mix of a squeeze in a heavily shorted market, and anticipation of what the ECOFIN was supposed to announce regarding EFSF restructuring. The problem is that Spanish sovereign bond yields (10Y bonds at 5.34%) have barely moved implying that the funding costs for Spanish banks will remain high, continuing to threaten their profitability.