Archived IMT (2010.09.09)

The rebound in 10 yr spreads of the PIIGS, is being dominated by Ireland and Portugal both of which, saw their spreads relative to Germany hitting new highs at 451 bps and 360 bps respectively. Portuguese spreads hit new highs on a combination of sharply slower Q2 GDP (0.3% q/q from 1.1% in Q1) and disappointing bon auctions. We just had a disappointing 3-yr and 10-yr bond auction today, with the avg yield for 3-yr bonds rising to 4.09% from 3.6% in June auction and the 10yr bond seeing its avg yield rising to 5.97% from 4.17% in June. Greece 10 yr spreads stand at 960 bps, just below the 970 bps record reached in July. But with 10yr yields standing at 11.75%, debt servicing costs shall remain a burden, especially as debt is widely expected to hit 150% in 3 years from 133% in 2010. Ill be travelling on holiday for rest of week so updates will be less frequent than normal.