Notably, the Italian 10-year bond traded back above the 7 percent yield, a rather disconcerting development as it appears banks, at least those active in the market, have taken the European Central Bank’s long-term refinancing operation as an opportunity to pad their balance sheets rather than soak up increasingly toxic sovereign debt. But, given the circumstances, who can blame the banks? New rules require banks to raise capital by June 2012, and instead of trying to raise capital and convince market participants of their solvency, borrowing at 1 percent in unlimited amounts is rather appealing.
British Pound Top Performer in Thin Markets
Notably, the Italian 10-year bond traded back above the 7 percent yield, a rather disconcerting development as it appears banks, at least those active in the market, have taken the European Central Bank’s long-term refinancing operation as an opportunity to pad their balance sheets rather than soak up increasingly toxic sovereign debt. But, given the circumstances, who can blame the banks? New rules require banks to raise capital by June 2012, and instead of trying to raise capital and convince market participants of their solvency, borrowing at 1 percent in unlimited amounts is rather appealing.
