Flight to quality/safe haven buying is continuing with EURUSD paring earlier gains and with German 10 year Bund yields marking yet again a new record low falling below the 1.35% mark while Spanish bond yields continuing their ascend towards the psychological important 7% level.

Early speculations that China might be readying a large stimulus package turned out to be overblown. Furthermore ECB member Nowotny pointed out that the ECB currently isn’t in discussions about restarting the bond purchasing program, dealing a severe blow to Spain.

Spain is already encountering difficulties raising money at affordable rates after recent turmoil out of Greece, making matters worse many of the Spanish regions are all but shut out of capital markets and finally possibly more funds than originally anticipated will have to be raised in order to be able to bailout banks who are in trouble.

Markus Huber - Head of German HNW Trading - ETX Capital
www.etxcapital.com