Ralph Atkins

It is one month since the announcement of the €750bn “shock and awe” international rescue package to save Europe’s government debt markets – and the results so far are not encouraging.

A key part of the plan was the European Central Bank’s decision to buy eurozone government bonds to stop the relentless rise in government bond yields of the weaker economies on the monetary union periphery. Yet the bond yields of Italy and Spain, which hit fresh peaks on Monday, are higher than they were before the emergency rescue plan was announced. Read more

The People’s Bank of China will today drain 75bn yuan from the money market through 28-day bond repurchase agreements (repos). Only 40bn yuan in central bank repos mature this week, so the move will tighten up the Chinese economy.

While excess liquidity is mopped up, however, the central bank continues to issue bills. In today’s regular market operation, 12bn yuan one-year bills were bought at a yield of 1.7605 per cent. The yield has remained at this level since August of last year.