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Spain exceeded the target of its fund raising, and received 2.541 billion euros, just above the 1.5 – 2.5 target. On the other hand, yields continued rising: fir the closely watched 10 year bond:  2022 bond yield 5.743% (last 5.403%).

The short term funding was OK in terms of yields: 2014 yield 3.463% (last 3.495%)  EUR/USD rose to resistance and then turned back.

Higher yields were expected as the secondary market already saw yields higher than 6%. The bottom line is: “it could be worse”, and that justifies the rise.

EUR/USD touched the 1.3165 line before retreating back to the levels seen beforehand, in the middle of the 1.3110 to 1.3165 range. For more on the euro, see the euro to dollar forecast.

The cover was better than last time:  2022 bond bid to cover 2.4 (last 2.2). 2014 bond BTC 3.3 (last 2.0).

Good results for short term auctions are backed by the LTRO: the ECB provided cheap 3 year loans to banks, which needed to pledge collateral. The collateral is in many cases local government bonds. So, Spain’s banks enjoy the arbitrage.

The bigger question was for longer term bonds, especially the 10 year ones.