The Italian government has raised almost $20 billion Euros this week after borrowing $7 billion Euros yesterday at about half the rate of the previous sale last month. Italy has seen their borrowing costs decline after the European Central Bank (ECB) has offered unlimited three year loans at a 1% rate. This is meant to encourage investors to invest these loans into higher yielding government bonds in order to help countries experiencing a debt crisis. In addition to the low interest rate loans being offered, rumors have circulated that that the ECB is investing in Italy as well. This is good news for Italy because the ECB’s involvement will create demand, lowering the interest rate, and will help Italy meet its rapidly approaching debt obligations. However, unless the new Prime Minister Mario Monti is able to spur the economy, the problem will not be solved; it will only delay the inevitable.
The Bryant Analysts hope everyone has a great holiday season. We would also like to specifically thank those protecting our nation; domestically and abroad. Bring on 2012!
On November 17th, fellow contributor Chris Bekel posted an article about Globalization’s effect on stock market volatility, and argued that the global markets have never been so interconnected. Upon reading Chris’ article, the first thing that came to mind was how closely the Dow Jones DJIA and FTSE 100 fluctuate between 9:30 and 11:30am (ET) while both exchanges are open simultaneously. Several days ago, Bloomberg released a stat saying that European and American markets have a correlation of 0.85.