The risk premium for Spanish 10-year bonds moved higher on Monday, following the pattern seen among their German peers. The spread climbed to its highest level since May 2020, crossing the 114-point mark as investors priced in greater uncertainty in the euro area’s long-term debt.
Although the day began with the premium around 110.6 points and closed the previous Friday near 113.8, it briefly surged during the session. The average of the day hovered around 114.7 points after remarks from the European Central Bank president, signaling a cautious tone for rates and fiscal strategy across the eurozone.
The rise in the Spanish risk premium marks a new peak, with the premium having fallen to its lows during the worst moments of the pandemic before climbing again this year. Secondary market yields have increased, underscoring a broader tilt toward higher borrowing costs in southern Europe. In January, Spain’s premium stood at 67 basis points, highlighting how the gap has widened amid ongoing inflation pressures and policy normalization.
Christine Lagarde, who chairs the ECB Governing Council, indicated that next month’s meeting would be a key moment for considering the first eurozone rate increase in more than ten years. She described the timing as opportune for addressing the inflation challenge and guiding monetary policy as it moves toward normalization.
In practical terms for investors, the yield on Spanish 10-year bonds began the session around 2.113 percent, after closing at 2.082 percent on Friday. The intraday high reached about 2.123 percent as market participants weighed potential rate moves and their effects on sovereign debt.
Germany’s ten-year bund opened the day around 0.976 percent, with an intraday peak near 0.996 percent and a trough near 0.931 percent. Across the euro area, other major issuers showed varied trajectories: Italian 10-year yields opened near 3.011 percent with intraday peaks around 3.044 percent, while Greek bonds started at about 3.741 percent and briefly touched 3.747 percent. Portuguese 10-year notes traded near 2.144 percent at the open, later moving toward 2.176 percent.
Over recent months, as inflation remains elevated and monetary policy moves toward normalization, government bond prices in secondary markets have generally trended lower, pushing yields higher. December figures illustrate this dynamic: Germany at approximately minus 0.388 percent, Spain around 0.309 percent, Italy near 0.895 percent, Greece about 1.206 percent, and Portugal around 0.264 percent. These shifts reflect a broad repositioning of fixed-income assets in response to the evolving economic outlook and policy signals from central banks across the region.