That Was Quick….

That rally didn’t last long. There are now concerns that the aid headed Spain’s way won’t be nearly enough. The S&P 500 has now given back almost all of its gains. Markets in Spain reversed course, and Italy’s market fell as well. The authorities are concerned that Italy is next.

Spain became the fourth euro member — following Greece, Ireland and Portugal — to seek a bailout since the debt crisis began almost three years ago after its borrowing costs approached euro-era highs. The amount sought by the nation is about 2.7 times the funds deemed necessary for its banks by the International Monetary Fund in a report released on June 8.

Prime Minister Mariano Rajoy, who took office in December and denied the need for a banking bailout as recently as May 28, is trying to complete the cleanup of Spanish lenders after past efforts fell short. He’s also faced with an economy in recession and an unemployment rate higher than 24 percent.

The bailout “takes the pressure off the Spanish government in the short term but Spain still has deep economic problems,” said Lyn Graham-Taylor, a fixed-income strategist at Rabobank International in London.

Italian 10-year bonds dropped for a fourth day, with the yield climbing 12 basis points to 5.89 percent. It earlier reached 6.02 percent, the highest level since Jan. 31.

Posted by on June 11th, 2012 at 10:30 am


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