Just two months ago, Europe’s sovereign debt problems seemed grave enough to imperil the global economic recovery. Now, at least some investors are treating it as the crisis that wasn’t.
Spain held an auction of 15-year bonds last week that went off without a hitch, raising 3 billion euros, or about $3.8 billion, at a relatively favorable interest rate of 5.116 percent. That was up from 4.434 percent on a debt sale in late April, though the latest one was far more heavily subscribed. How quickly investor psychology has changed.
“Europe has had a pretty good crisis,” said Jacob Funk Kirkegaard, a fellow at the Peterson Institute for International Economics in Washington. “In the short term, it made a number of very constructive decisions that had the effect of calming down the markets or shifting market attention elsewhere.”
Indeed, there has been a string of calming news of late: well-subscribed bond auctions in Portugal and Italy, a deal to freeze wages in Greece as it tries to rein in its public spending, and signs that German industry, so important for the rest of Europe, is growing more strongly than expected, according to data for May.
For more: After Tumult, Debt Worries Ease in Europe - NYTimes.com
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