Eyes roll over Spain, taking the heart of the debt crisis, and Prime Minister Mariano Rajoy who is until now hasn`t decided whether his country needs financial aid and now the major concern is the sky-high borrowing costs, as Madrid tests its debt market with a sale of longer-dated bonds on Thursday.
Well, it`s all about fiscal credibility, and Rajoy`s patience about the rescue is not going to make things better all of a sudden. Markets are actually running out of risk as many analysts believe this is no patience but hesitancy to escape what looks to be inevitable since sentiment is still on the brink.
Madrid sold 4.6 billion euros of short-dated debt two days ago, where short-term costs fell slightly and demand was better covered but long-term costs remained relatively high despite optimism about the European Central Bank`s new bond-buying strategy, which hasn`t been sought by Spain for aid yet!
Madrid-based Treasury sells 10-year debt and new three-year bond on Thursday, testing demand for Spanish risk. Spain`s 10-year yield rest now above 6 percent, with uncertainty about the debt market and Spain`s bailout request, after the country already requested 100 billion euros of aid for its banks.
Meanwhile, traders set to watch a couple of crucial fundamentals from the euro area and Germany, with manufacturing and services on the front of the agenda on Thursday. The Purchasing Managers Index (PMI) on Manufacturing and services in Germany may show some improvement in an initial estimate this month.
In the euro area, manufacturing and services growth were probably little changed this month, according to an advanced reading of the region`s PMIs, as weak demand continue to hammer growth in the euro area as well as the sovereign debt crisis deepening in its third year and risking the future of the euro.
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