Meanwhile Spain’s bond yields have been ticking upward as they prepare to unveil a very austere budget plan.
—Douglas Cote, SVP & chief market strategist, ING Investment Management
March 30, 2012
It’s been quiet in the euro zone but the effects of the recent LTRO liquidity injection are fading and we are starting to see the pot bubble up again. The latest is the news that the euro-zone finance ministers just agreed to temporarily boost the lending capacity of the region’s bailout fund to 700 billion euros in an effort to convince markets they can prevent the spread of the region’s long-running sovereign debt crisis. Some economists feel this will be insufficient but the market was pleased. Meanwhile Spain’s bond yields have been ticking upward as they prepare to unveil a very austere budget plan. Workers are striking in Spain as in Portugal to protest severe budget cuts. Finally, Greece announced that they can’t rule out - surprise - a third bailout. On the positive side, Germany, the paymaster throughout this crisis, just hit an unemployment rate two decade low of 6.7% in March.