Via Mint Partners’ Bill Blain,
Today’s big event was Italy’s 10% auction. Buyers can’t ignore yield, and I suspect many were “encouraged” to participate. But a decent Italy auction doesn’t change the brutal facts. Electoral fall-out blankets the Euro battlefield, but it was decisions made years ago that have brought us to this blasted heath. Markets are caught in…
Stalemate.
On one side you have the disbelief on the Italy election (although why markets are surprised we cannot fathom) and all that entails about rising uncertainty on the Euro. On the other is the fact buyers need to invest. In the short-term expect the pressure to invest to win out – Italian and peripheral yields will consolidate and even tighten again. Risk off will quickly become Risk-on!
From there it becomes a debate about whether the Italy election was just another minor stumble that can be glossed over, or is it part of a more significant fundamental shift? I suspect market fears, uncertainty, and the global fundamentals will likely see the Euro crisis reveal itself again in four distinct ways in coming months:
The Politics of Austerity
Banks
Sovereigns
Renewed Unwind Fears
Read More at Zero Hedge . By Tyler Durden.
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