Trader Talk
- Hostage to Headlines
- Facebook Analyst Reports All Over the Map
- More Fallout From the Facebook Fiasco
- Facebook and Morgan Stanley's 99 Problems
- Lousy Economic Numbers, but Stocks Hold Up
- Eurobond Talk: Good News and Bad News
- Hopes Fading for Big Announcement From EU Leaders
- European 'Crisis Tennis' Again
- Facebook IPO 'Conspiracy' Theories Abound
- OK, Facebook Is Embarrassing
TRADER TALK RSS FEED
MOST SHARED
- Glitches Halt New Goldman Trade Platform
- Euro Zone Bank Safety Net Leaves Holes Unplugged
- Greece to Leave Euro Zone on June 18: Wealth Manager
- Shares to Open Higher; Investor Focus Turns Home
- Osborne in U-Turn on Hot Pasty Tax
- Funds Cut Exposure to Euro Zone Banks
- As Irish Head to Polls, ‘No’ Voices Get Louder
- Euro Isn’t Loved, but Few Want to Drop It, Poll Says
- Egyptians Torch Shafiq HQ as Vote Triggers Violence
- Fire Kills 19, Mostly Children, in Upscale Qatar Mall
- Facebook: The Song — Yes, We're Serious
- A New Look at the ‘New Poor’
- Six Pack: Beer Buzz of the Week
- Greek Exit Could Trigger 50% Fall in Euro Stocks: Analyst
- Under Pressure, FHA Skews to Wealthier Home Buyers
- Big Stock Upside for Hudson City Deal: Analyst
- 5 High-Yield Stocks Ready to Boost Dividends
- Yoshikami: Four Things You Need to Know About Gold Now
- Steinbock: The Euro Zone Endgame Begins
- Euro Isn’t Loved, but Few in Europe Want to Drop It: Poll
- Madoff Case Is Paying Off for Trustee ($850 an Hour)
- Euro Zone Bank Safety Net Leaves Holes Unplugged
- Buffett-Backed BYD Defends Electric Car After Accident
- 'Shadow Banking' Sector Halved Since Pre-Crisis: Report
- Don't Buy Hon Hai Shares on Apple TV Rumors: Analyst
- Glitches Halt New Goldman Trade Platform
- Samsung Galaxy S3 a Threat to the IPhone?
- Greece Pours $22.6 Billion Into Its Four Biggest Banks
Why EFSF Auction Was So Weak
Text Size 
CNBC Reporter
What if the EFSF had an auction and nobody came?
The EFSF
![[cnbc explains]](http://media.cnbc.com/i/CNBC/Sections/News_And_Analysis/_News/_CNBC_EXPLAINS/_IMAGES/CNBC_explains_icon1.gif)
finally got an auction through Monday, but nobody is cheering. To begin with, the initial auction of 5 billion euros that was supposed to happen last week was cancelled. Today's auction of just 3 billion euros clearly indicates lack of demand.
Second, spreads are widening on the bonds. The yield on the 10-year EFSF bond that was floated today (the money will be used for Ireland) was 3.59 percent, considerably higher than even 6 weeks ago. Ten-year German bonds are at 1.8 percent, by comparison.
Poor demand is one factor, but others are pointing to concerns that France may eventually lose its AAA-rating. The EFSF is itself guaranteed by Germany and France (mainly), so if France is downgraded the EFSF could also be downgraded. That would make the cost of bond issuance prohibitive.
But it's already getting prohibitive.
With yields moving up, prices moving down, earlier buyers of these bonds (governments like Japan, for example) cannot be happy. That may be one reason there was such low interest last week from the G20 on expanding the EFSF.
We need a credible plan to ring-fence Italy and Spain. If we get that, markets will move up and stocks will start to trade on fundamentals. Without it, the doomsayers will be right: the ECB
will be forced to go all-in when nobody can afford to float debt, or buy it.
Elsewhere, stocks rose midday on a somewhat off-the-cuff remark from ECB member Juergen Stark: "I assume that in 1-2 years at the latest the crisis will be under control, if not overcome. Overcome in the sense that acute political actions are no longer necessary."
Two years? That's how far we've come: that's worth 80 points on the Dow. And Stark is leaving the ECB!
_____________________________
Bookmark CNBC Data Pages:
_____________________________
Want updates whenever a Trader Talk blog is filed? Follow me on Twitter: twitter.com/BobPisani.
Questions? Comments?
- Critical elections are scheduled for Greece in June. Here are some of the players and their roles.
- Our financial system is still not designed to meet the needs of poor families, says this author.
- Statistics show there aren’t many women billionaires compared to their male counterparts. Why?
- Click to see various forms of funding and what entrepreneurs have used to build successful companies.
- Here are some of the most expensive hotels in the world to book. And we mean expen$$ive.
- Always drink responsibly and when you do, try one of these more unusual and tasty drinks. Cheers!
- Hostage to Headlines
- Facebook Analyst Reports All Over the Map
- More Fallout From the Facebook Fiasco
- Facebook and Morgan Stanley's 99 Problems
- Lousy Economic Numbers, but Stocks Hold Up
- Eurobond Talk: Good News and Bad News
- Hopes Fading for Big Announcement From EU Leaders
- European 'Crisis Tennis' Again
- Facebook IPO 'Conspiracy' Theories Abound
- OK, Facebook Is Embarrassing
Data is a real-time snapshot *Data is delayed at least 15 minutes
