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Dow Jones News Wires Feature Spotlight Ideas

Monday June 18th 2012

18 Jun 2012 12:50 CEDT DJ UPDATE: Netherlands Sells 3-Month Treasury Certificates at 0% Yield
Strong demand for safe havens
By Emese Bartha
Investors bought three-month Dutch Treasury Certificates at par value at Monday's short-term debt auction as markets remained strongly risk-averse despite pro-bailout party win at Greece's weekend elections. 

The Dutch State Treasury Agency sold EUR1 billion of three-month Treasury Certificates at a uniform yield of 0% and it also sold EUR1.360 billion of six-month paper at 0.019%. Both series received strong demand, EUR4.43 billion and EUR3.60 billion, respectively. 

The yields at Monday's auction, however, do not represent all-time record lows for these maturities at Dutch auctions. At a debt sale Dec. 5, 2011, the DSTA sold three-month debt a yield of -0.004%, effectively making investors pay for the privilege of holding Dutch debt, and six-month Treasury Certificates at 0.002%. 

Also, at an auction Jan. 3, the DSTA sold three-month Treasury Certificates at 0%. 

"The reason for the 0% is pretty clear: there's so much risk aversion," said a London-based analyst, speaking on condition of anonymity. "It absolutely has to do with the current market, with investors running into safe havens," the analyst added. 

With almost 100% of the vote counted, New Democracy was backed by 29.7% of voters, giving it 129 seats in the 300-seat Parliament. Syriza secured 26.9% of the vote, giving it 71 seats. Talks on the formation of a new pro-bailout coalition government are expected to begin Monday. 

But analysts said France's legislative elections, also held Sunday but somewhat overshadowed by the Greek elections, also posed some risks for markets after the Socialist Party of President Francois Hollande secured a majority in the National Assembly. 

Economists at Spotlight Ideas said they "actually feel the euro zone is now a worse place than last week because the vote in France gives socialism a blank cheque to go on a less than efficient tax and spend programme." 

"Raising money by taxing wealth creators and business at penal rates is not the way ahead," said Stephen Pope, managing partner at Spotlight Ideas.
Write to Emese Bartha at emese.bartha@dowjones.com
(END) Dow Jones Newswires 

June 18, 2012 06:50 ET (10:50 GMT) 

Copyright (c) 2012 Dow Jones & Company, Inc.
 
 
18 Jun 2012 11:35 CEDT DJ FX CHAT: Spotlight says euro zone is now worse place than last week...


Because of the vote in France gives socialism a blank cheque to go on a less than efficient tax and spend program. "Raising money by taxing wealth creators and business at penal rates is not the way ahead," says Stephen Pope, managing partner at Spotlight Ideas. Spotlight recommends selling debt except Germany and also recommends selling the euro. (
emese.bartha@dowjones.com)
(END) Dow Jones Newswires 

June 18, 2012 05:35 ET (09:35 GMT) 

Copyright (c) 2012 Dow Jones & Company, Inc.
 

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