From Brussels the greats of Europe announce the ok to the anti-spread shield and the markets adjust immediately. Result: differentials collapse, while the single currency strengthens again against the dollar. In detail, this morning the gap between the yields of 10-year BTPs and the corresponding German Bunds decreased by more than 50 basis points in a few minutes, reaching 417, after closing just yesterday evening at 468 bps. The new width of the gap corresponds to interest rates on our ten-year bond at 5,843%, down from yesterday's 6,021%.
It decreases even more the spread of Spain, which is well below the 500 basis point barrier. In the morning, the Madrid spread recorded a minimum of 486 basis points, while yesterday at the end it was still around 540. In this case, interest rates fell from 6,796% to 6,487% in a few hours.
As for theeuro, continues to rise against the dollar: when the main currency markets of the old continent open, the single European currency is exchanged with the greenback at 1,2608. Yesterday on Wall Street, the euro was worth 1,2444 dollars.
Meanwhile the stock markets also take off, with Piazza Affari reporting a 2,8% increase immediately after the opening.
Today's trend is linked to the agreement reached during the night at the EU summit underway in Brussels. The go-ahead has come from the heads of state and government of the eurozone anti-spread shield proposed by Mario Monti during the last G20 in Mexico. Basically, the state bailout funds (first the EFSF, then, when it becomes active, the ESM), will be able to purchase government bonds of European countries virtuous in terms of public accounts but burdened by an excessively high spread on the secondary market of international speculation.
Furthermore, to untie the fate of the banking system from that of the public finances, it was established that the ESM can lend funds directly to credit institutionswithout going through the state coffers. In the short term, this measure will avoid increasing Madrid's public debt, given that Spanish banks are about to receive tens of billions of euros in European aid.
