Peripheral yields scream in as Merkel makes market happy

Peripheral sovereign yields tightened aggressively on Thursday afternoon as comments from Angela Merkel that Germany would back the use of existing euro-area instruments to help stabilise markets added to the relief rally after Spain successfully sold 10 year debt at auction this morning. Heightened expectations of an intervention by an institution such as the EFSF to aid Spain’s beleaguered banking system added to the positive sentiment.