Wall Street Journal
November 22, 2011
Euro-zone bond markets suffered another selloff Tuesday, with investors especially dumping short-term debt after Spain was forced to pay a heavy price to auction its latest brace of Treasury bills.
The Spanish Treasury was forced to pay a euro-era record 5.11% yield on three-month Treasury bills at auction, more than double the rate paid at last month's auction. By way of comparison, to access the short-term debt market Spain now must pay more than Greece paid at its last three-month auction a week ago.
Spain also paid an average yield of 5.227% for the new six-month Spanish T-bills, up from 3.302% and now higher than what Belgium currently pays on its 30-year government bonds.
Spain last week had to offer a yield of nearly 7% on a new 10-year government bond auction. Market participants view the price on the 10-year bond as unsustainable over time. Greece, Ireland, and Portugal were all forced into seeking external assistance when yields climbed past and stayed above that line.
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