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Euro - "Spain's Bailout Boost Quickly Turns to Rout"
Investors fled from Spanish government debt on Monday

Extracts: .... The unwinding was remarkable for its speed: The cheers for the Spanish bailout lasted just hours - by the end of the trading day any euphoria had evaporated and was replaced by gloom. ....

..... Credit-default swaps on the Spanish government, insurance-like contracts that pay off if Spain defaults, zoomed higher Monday. Spain dragged Italy deeper into trouble, too; the Italian 10-year yielded 6.04%, up more than a quarter of a point. ...

.... "Spain's capital injections entail a transfer of risk from the private to the public sector," said Phoenix Kalen, a macro credit strategist at Royal Bank of Scotland Group PLC. The European loan "will increase Spain's debt burden, while equity injections represent additional risk that the Spanish government is taking onto its balance sheet." ...

.... Spanish banks largely have exhausted their stockpiles of ECB funds, analysts say. Now the question is whether, after getting recapitalized by the government, they will keep buying sovereign bonds .... (because if they do that will only increase their perceived riskiness). ... 

#spain   #euro  
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Tom Holmes's profile photoHassan Al Shouli's profile photo
 
End of the line for the euro?
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