This is painful to watch....Benoit Coeure, an executive director of the ECB, said the bank could restart its sovereign bond buying programme in a move likely to antagonize Germany but relieve a spiralling political, economic and social crisis in Spain.
This is painful to watch. The ECB made a huge mistake when it didn't take losses in Greece. Yes I know the politics were unpaletable. But think about the message it sent! ECB bonds even from the same issue as yours are senior to yours because it's owner is the ECB. Well that's a game that only works once. If you are a bond buyer why on earth would you touch bonds from other countries that could go the same way? The answer is you wouldn't, so finding buyers for this rubbish is hard. To date the way the ECB acchieved it was to basically allow bus tickets as collateral from people who are in so deep buying a few more won't make a material difference. Of course Greece was a one off (so we are told) the problem is the poeple doing the telling are in large part self confessed liars. No one sensible with billions of pensioners saving's to invest is going to be touching this stuff anytime soon. Pity the Norwegian pensioners whose fund that took a 75% haircut on it's Greek bonds and recall all these (same) liars telling us there would be no Greek default. Greece is only a one off until the next time and we all know this. Mr Coeure said that market fears over Spain were "not justified" but he added: "Will the ECB intervene? We have an instrument, the securities markets programme [SMP] which hasn't been used recently but it still exists."
Bond traders were soothed by the comments. The yield on Spain's benchmark 10-year bonds was pulled back from 6pc on Tuesday to 5.88pc, while the yield on Italy's 10-year debt also dropped marginally, to 5.54pc.
Mr Rajoy delivered a strongly-worded speech to parliament insisting that it was "as clear as day" that Spain would not need a Greek-style bail-out.
But in recognition that the country is losing market confidence, he appealed to other European leaders to be "careful with their comments" and remember that "what is good for Spain is good for the eurozone".
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Ahem! Spain was downgraded by the credit rating agencies for this very reason. All was laid bare in the agencies' press releases. And now - NOW - the Spanish prime minister is warning Europe about a vicious circle, as though there had been absolutely no forewarning of this impending misery fest whatsoever. Quite honestly it takes my breath away. Even a financially unqualified pleb like me knew the eurozone would eventually go tits skyward THREE YEARS AGO. But did people listen?! Did they heck.
It is Friday the 13th tomorrow and there is every chance of a horror show from the UK construction output data, says Alan Clarke, UK and eurozone economist at Scotia Bank. In short, depending on the outcome of these data there is a risk that Q1 GDP is negative. That would be much weaker than we were hoping for a couple of months back given elevated PMI surveys. It could also provoke further asset purchases from the Bank of England at the May MPC meeting. Tomorrow also brings the second estimate of German, Spanish and Italian inflation figures for March. Meanwhile, Italian industrial production data are expected to show that output fell for the second month in a row in February. In the US, the focus is also on inflation, with the headline annual rate expected to have fallen from 2.9% to 2.7%. In the markets, the Fed will buy $1.5-2bn of USTs.
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