Portugal Gets Reprieve For Now - The Euro was able to forge higher for a third straight day against the USD as Portugal's bond auction went well and helped peripheral spreads decline - ten year yield fell for Greece, Spain, and Ireland. Portugal was able to sell E600 million of bonds due in 2020 at a yield of 6.716. The yield was able to stay below the 7% level, which is the magic number where debt levels become unsustainable due to high service costs. Let's put this into perspective, this auction for Portugal was minor compared to the heavy refunding due in April and I'm sure that the ECB was busy buying the bonds in order to buy more time and to calm the markets. Meanwhile, the GBP was able to muster some positive ground despite news that the U.K. trade gap widened to record levels. Stock markets have caught a bid on the successful Portuguese bond auction and this is encouraging a move to risk on so the USD has been moving down across the board this morning. In Canada, the CAD continues to make headlines by remaining above parity and powering ahead as interest rate expectation continue to move forward. Swap markets are pricing in an 80% chance that the Bank of Canada will raise interest rates in April. Also adding support to the CAD are the move up in prices of oil, copper, and gold.
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