Spanish and Portuguese bonds are up as the ECB has stepped in to buy the stuff, reports Bloomberg.
The spread to hold Spanish 10-year bonds over German bunds has dropped by almost half to 99 basis points as the ECB intervenes. The Portuguese spread has shrunk nearly 200 basis points to 158 basis points.
The ECB says it will sterilize the money it is printing by draining money from other sectors. It is questionable as to how much will be actually drained. However, to the degree money is drained from other sectors it distorts the economy. To the degree it is not sterilized it is highly inflationary.
There is a reason gold is up today.
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