The aid request would have to be approved by parliaments in some core members. It claims that the Spanish government is comfortable potential attached conditionality with it preferring to apply for a precautionary enhanced conditions credit line rather than enter a full-macro-economic adjustment program. At the same time a Bloomberg is reporting today that the Spanish government may hold off for as long as possible to seek more favorable bailout terms.
According to the BTMU Research Team, “The reports highlight the high degree of uncertainty surrounding the timing of an official aid request from the Spanish government, which would eventually trigger ECB bond purchases through the OMT. The market remains sensitive given that it has already materially discounted intervention.” Elsewhere the UK inflation report for September is expected to reveal that inflation continues to moderate back towards the BoE’s 2.0% target supporting the case for monetary easing.