ECB tonic buys time for eurozone

Financial Times
February 3, 2012

The day of reckoning appears to have been postponed in the eurozone.

Fears of a eurozone break-up, which dogged markets in December, have receded as peripheral government bonds – with the notable exception of Portugal – have seen one of the biggest rallies since the sovereign debt crisis began.

Benchmark 10-year Spanish yields have fallen below 5 per cent for the first time since November 2010, which is around the time most analysts and investors believe that contagion first hit Madrid properly.

It is a similar, but somewhat more muted, story with Italy where 10-year yields are below 6 per cent and at their lowest since October. Some market participants are even whispering: could the crisis be over?

The answer for most investors and strategists is: of course not.

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