Spanish 10’s print +6%

Spanish 10-year yields topped 6 percent on Friday before retreating after upbeat German economic data but a break higher was seen likely as investors worried about Madrid’s ability to deal with its fiscal problems.

Pressure on Spanish debt grew after a debt auction on Thursday fell short of market expectations, lifting Spain’s default insurance costs close to record levels. Ten-year yields were last at 5.97 percent, up 4 basis points on the day.

A sustained break of 6 percent in 10-year yields could see borrowing costs accelerate to unaffordable levels which drove Greece, Ireland and Portugal to seek international bailouts.

“Spain remains the main worry and if it breaks decisively 6 percent…that will get markets even more worried because after that there’s 7 percent where you get all the memories about Greece and Portugal coming back,” Lloyds strategist Achilleas Georgolopoulos said.

The latest flare-up in the euro zone debt crisis threatened to spread to Italy, where 10-year yields rose as high as 5.74 percent before falling back slightly.

Reuters

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell
Dean Popplewell

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