Italian bond auction watch: The Italian Prime Minister Monty called on significantly increase of the scale of the euro zone relief fund on Thursday. Earlier Thursday, the Italian government launched the second round of Italian bond auction in the two days, although the good result eased the market sentiment, but did not alleviate the market concerns about the outlook of the Italian government public spending in the coming months.
In the Italian bond auction on Thursday,The Italy’s finance costs have fallen from the historic record high, but the cautious investors still requested a nearly 7% yield of the 10-year bonds.
The high cost of financing is still the euro zone’s third largest economy’s exerted tremendous pressure, because Italy will face a refinancing of the most difficult stage in early next year. Market traders also said that after the beginning of this Italian bond auction, the European Central Bank had entered the open market to buy the debts, which helping to drive down part of the return rates.
The European Central Bank injected an unprecedented liquidity of 500 billion euros to the financial market to help banks to access to cheap funds, and the Italy’s new budget this month helped to alleviate the Wednesday short-term debt auction pressure. But the Italian government’s will continue to face challenges in the longer-term Italian bond auction.
In the light holiday trading market, Italy sold a total of 70 billion euros ($90 billion) bonds on Thursday, the amount was slightly higher than the midpoint of its target range. The sale of the 10-year benchmark government bonds auctioned by the Italian govenment had reached the ceiling of expectations, but the revenue was still 6.98%, not far from the 7.56% yield a month ago.
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