France, Spain Sell EU14.6B in Debt as Yields Drop

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France and Spain sold 14.6 billion euros ($18.8 billion) of bonds, with both nations’ funding costs falling in the first sale of medium and long-term debt since Standard & Poor’s downgraded their ratings.

France sold 7.97 billion euros of notes, just short of its maximum target, with the average yield on the benchmark two-year notes sliding to 1.05 percent from 1.58 percent in October. Spain sold 6.61 billion euros in bonds maturing in 2022, 2019 and 2016, more than its maximum target of 4.5 billion euros. It issued debt due 2022 at an average of 5.403 percent, down from 6.975 percent in November.

The sales came after S&P on Jan. 13 stripped France of its AAA rating and cut Spain by two levels to A. Spain has exceeded its maximum targets in all its bond auctions since Dec. 13, and demand has strengthened since the European Central Bank pumped 489 billion euros of three-year loans into the financial system on Dec. 21.

“They are both good strong auctions,” Padhraic Garvey, head of developed markets debt strategy at ING Bank NV in Amsterdam, said in an interview. “Spain is showing the market there’s ample demand for their paper. The result is perfectly in line with the sentiment we’ve see over the past couple of weeks. The ECB measures obviously help.”

The demand for Spain’s 2022 bond was 2.17 times the amount sold, compared with a bid-to-cover ratio of 1.54 in November. For the French sale it was 2.4, in line with 2011 sales. » Read more: France, Spain Sell EU14.6B in Debt as Yields Drop

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Newt and the “food-stamp president”

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THE AUDIENCE of Monday night’s Republican debate in Myrtle Beach, South Carolina reached its climax of enthusiasm during Newt Gingrich’s exchange with Juan Williams, who asked Mr Gingrich if he could perhaps see how certain comments he has made in the past might give special offence to black Americans. Mr Gingrich is now using highlights from the confrontation with Mr Williams in order to make the case that “Only Newt Gingrich can beat Barack Obama” in a TV spot airing in South Carolina.

When Mr Gingrich replied to Mr Williams that he cannot see why some might take umbrage at his comments that black Americans “should demand jobs, not food stamps” and that poor kids tend to lack a strong work ethic, I don’t think it’s quite right to say he was “playing dumb”. On the contrary, Mr Gingrich acts as though he is so morally evolved, so essentially oriented toward truth—as though he surveys the world from such an Olympian height, through such crystalline air—that he is unable even to imagine how his use of venerable racist tropes could be sensibly seen to serve a purpose other than transmission of the plain truth. This haughty pose flatters the bigots, who Mr Gingrich knows full well are roused by talk of food stamps and an underdeveloped taste for honest labour, reframing their hoary prejudice as gallant unflinching fidelity to facts. » Read more: Newt and the “food-stamp president”

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2012 economic forecasts: Canada best place to be

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We asked the economists of Canada’s five big banks for their views on the outlook for the coming year.

Warren Jestin, chief economist for Scotiabank, on the global outlook

There will be significant volatility in financial markets, for three main reasons: In the U.S. and in Canada, growth will struggle to be 2 per cent this year. Europe will have no growth, and the emerging world is still on the fast track, but there will be a slowdown in the overall economic activity.

That has an implication for business earnings. It can also create problems for governments, which rely on economic growth for tax revenue.

Then there’s the never-ender in Europe. Remember that they are trying to contain the sovereign debt issue. There is no cure on the table. We will have a number of band-aids put on this over the next little while. But at the end of the day, the longer term problems of dismal growth and the demographic issues Europe faces suggest to me that we will still be talking about the European debt issue five years from now.

The third issue is that the U.S. is not having an adult conversation about its fiscal problems.

When you put those three together, it virtually guarantees a lot of volatility in bond, currency, and commodities markets.

Still, when you look at what exists in Canada, this is still the best country in the world to be in. We are sheltered in many, many ways in our domestic markets from the enormous shifts that are occurring in the rest of the world. » Read more: 2012 economic forecasts: Canada best place to be

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