The European Central Bank president states that banks in Europe will be supported by renewed supply of liquidity via bond purchases. Yesterday Spain and Portugal were able to sell their sovereign bonds on the market thanks to the assurances of the ECB President Jean-Claude Trichet. Some members of the ECB want to see the liquidity pump turned off, but others warn that there might be a slump in 2011, and banks need the backing of the ECB.
Yesterday European markets rose ad the euro traded higher against the dollar. Irish, Portuguese and Italian bonds had lower yields yesterday, and the credit default swaps (CDS) also fell.
Mr Trichet stated that Europe's resolve in solving the crisis should not be underestimated. The yields on Spain's, Ireland's, Italy's, Belgium's and Portugal's bonds were all trading lower today. Spain was able to raise nearly 2.5 billion euros with its bond auction.
