Spain to Request Bailout Before September

Although there have been no further indications by Spain that it would ask for EFSF/ESM help at this stage, Barclays Capital expects such a request to come before the beginning of September.

That would pave the way for the ECB intervention to curb the rising of the Spanish government bonds, but won’t take away alot of the related uncertainties, Barclays adds.

Chief among these uncertainties are 1) the conditionality attached to the ECB intervention; 2) the actual modus operandi of primary and/or secondary market buying by the EFSF; and 3) the impeding decision by the German Constitutional Court on the ESM.

In the meantime, Barclays sees the short peripheral yields since the ECB meeting suggesting that markets think intervention will be up to the 2-3 year sector. Thus, if and when appropriate EFSF/ESM intervention is put in place, longer-end rates could start rally as well, Barclay concludes.

via efxNews

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza