Spain leads the rise in risk premiums in Europe in the last week and leads with Italy the concern of the European Central Bank (ECB). The risk premium of spain has shot up 23% since October 8, the day of the meeting of the European Central Bank (BCE) in which he announced the rise in interest rates from July until Tuesday, the day before the ECB meeting to respond to the increased risks of European countries. On October 7, it was at 112 points and on Tuesday it closed at 137 points, the highest level since May 2020 when uncertainty about the impact of the coronavirus on the economy and the recovery in productivity were at their highest.
The increased country risk of Portugal in the last week it has been 18%. It closed at 137 basis points on Tuesday, a July 2020 high, from 116 points on June 7. Same percentage increase for the risk premium of Italia which reached 250 basis points on Tuesday, records that it had not visited since mid-2020. For its part, the Greek rose 17% in that period, to 294 basis points, July 2019 zone.
The higher percentage of upturn in the Spanish and Italian risk premium makes the market see that financing risks are higher for both countries once the ECB concludes the asset purchase program at the end of the month. In the Spanish case, the Government must entrust the national banks and foreign investors with the aim of placing 100,000 million euros in bills and bonds in the second part of the year.
Lagarde focused her appearance before the media on the fact that the main objective of the ECB is inflation, leaving aside whether possible mechanisms are on the table to stop the fragmentation of the debt market suffered by bonds from the periphery.
The yield of the 10-year Spanish passed 3% yesterday, an interest that has not been registered since April 2014, when half a year ago it stood at 0.32%, while the German at the same term, which is the solvency reference in Europe and whose difference with the Spanish determines the risk premium, also rose, but to a lesser extent, to 1.75% to reach levels of January 2014. The rise in bond yields is showing the government of Sánchez that it will be more expensive to finance itself during the second part of the year, which will damage the State’s accounts.
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