Spain sold €10B of short term notes, which mature in July 2015, to yield 3.38% compared with 5.187% the December auction. The Treasury also sold auctioned maturing in 2016, and those yields also declined.
Italy’s Treasury sold one-year bills at 2.735%, less than half 5.952% paid on similar-maturity securities on Dec. 12. It also sold 136-day bills to yield 1.644%.
While the immediate media comment is very positive, there are still worries. Certainly these rates are better than those obtained at the height of the panic in late 2011. But to find acceptable yields, both Spain and Italy have had to stay short on the yield curve. the 10Y rates for both countries are little changed and remain unsustainable for financing. Market enthusiasm looks overdone.