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On Thursday, the Spanish government’s borrowing costs came within a whisker of their euro-era high. Madrid’s 10-year bond yield jumped back above 7pc in a poorly-covered €3bn auction.

Trying to minimize its immediate financing costs, Spain has recently skewed its debt sales towards short-term instruments. Ominously, though, yields are soaring even on 2-year debt. Sovereign bonds for 2014 repayment were last week sold only at a huge 5.204pc yield, with Madrid now paying a fifth more for short-term money than it was six weeks ago. Even at these sky-high rates, the 2-year auction was also poorly-covered.
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