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Spanish Bond Yields Print Currency Bloc High

Autore: Dean Popplewell for Oanda




Spain’s bonds slumped, with 10-year yields rising to a euro-era record, after Moody’s Investors Service cut the nation’s credit rating to one step above junk, citing its rising debt burden and weakening economy.

Italy’s 10-year yield reached the highest level in almost five months after its borrowing costs surged at a sale of 4.5 billion euros ($5.65 billion) of three-, seven- and eight-year notes. Spanish 10-year bonds have dropped all four days this week after the nation requested as much as 100 billion euros of aid for its banks last weekend. German bunds gained.

The “markets are telling us that they’re unconvinced by the bank bailout and that the next step is that the government will have to concede, capitulate, and go for a sovereign loan,” James Stewart, head of macro research at AX Markets in London, said in an interview with Mark Barton on Bloomberg Television’s “Countdown.” “That seems to me quite likely, and even now I think it’s moving on from Spain to Italy.”

Spain’s 10-year yield climbed 20 basis points, or 0.2 percentage point, to 6.95 percent at 1:27 p.m. London time after rising to 6.998 percent, the highest since the euro was introduced in 1999. The 5.85 percent bond due in January 2022 fell 1.305, or 13.05 euros per 1,000-euro face amount, to 92.405. The yield has jumped 74 basis points this week

Italy’s 10-year yield was little changed at 6.21 percent after advancing to 6.34 percent, the most since Jan. 20.

Bloomberg


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