Mecklai Graph: Italian 10-year bond yield in 2012

Mecklai graph of the day: Italian Ten-year bond yield in 2012

The euro-region leaders have been trying to find avenues for bringing down the borrowing cost of the ailing euro economies to avoid a Greece like default. In the middle of the year when Spain and Italy started showing signs of severe weakness against the backdrop of few regions asking for a bail out, yields surged to alarming levels of 6.5 percent warranting prompt action from the euro leaders and major entities. Mr. Draghi, the chief of ECB took initiative to announce unlimited bond buying for ailing economies shoring up confidence of investors in these economies. For the first time he was saying clearly that he had a mandate to reduce peripheral borrowing costs, and that he would use the ECB to do this. Peripheral borrowing costs in countries like Italy and Spain have been falling ever since, just on this implicit backing. The 10-year yield is now at 4.4 percent and as the year draws to a close, optimism that Europe has turned a corner has grown to the point that even Greek borrowing costs are plummeting. So it remains to be seen whether ECB has done enough or will have to do more to arrest the rise in yield in the new year. Below graph shows Italian Ten-year yield in 2012                                 Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. To read the full report click on the attachment

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