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Spanish auction results: more positive than expected

Spain sold €5.64 billion of bills at an average yield of 1.735%, compared with 5.11% in Nov. It sold 6-month paper at 2.435% v. 5.227%.  Today, the ECB begins its lending program at 1% with a broad range of collateral.  Spanish regulator is encouraging its banks to borrow "aggressively" partly to be able to buy more Spanish Soverign debt.

Sure, its a "kick the can" strategy, but Spain seems to have obtained an enormous benefit.  Spanish yields are still well above German and US rates, but a huge improvement over the panic level of November. 

This will put more focus on recaping the Euro banks.