Spanish Bond Yields Rally on Thirst for Stability
This Thursday brought a notable milestone for Spanish debt, as a maturity of 10 years reached its highest yield in the secondary market since mid-2015, exceeding 2.3 percent and keeping the upward path evident for several sessions.
At market open, Spanish bonds advanced by 2.302 percent, a hair below the 2.304 percent seen at the previous session close. Through the day, prices showed a renewed momentum with a sequence of gains that pushed the intraday yield to a peak of 3.356 percent.
The market move coincided with positive domestic data: unemployment registered with public employment services declined by 99,512 people, a 3.3 percent drop, reducing the total unemployed count to below 3 million for the first time since the financial crisis began in 2008. Social Security also added momentum, reporting its strongest May since 2018 with 213,643 new members.
The day’s narrative unfolded as the public treasury prepared its Thursday issuance with a forecast of 4,761.83 million euros within the expected range. Investors were offered higher yields for the references tendered in the first June issue, with the 10-year note yielding above 2.1 percent.
On the Bund side, the 10-year German bund started the session slightly lower with an opening yield of 1.185 percent, edging down from Wednesday’s 1.187 percent. It managed to reach an intraday high of 1.227 percent around the mid-session.
The opening spread, or risk premium, for 10-year Spanish debt versus the equivalent German bund stood at 111.9 basis points. The gap widened to a peak of 113.2 basis points toward mid-session as the trading day progressed.
Across Southern Europe, the environment remained mixed. Italian 10-year debt posted a maximum yield of 3.271 percent on Thursday, up from 3.204 percent at Wednesday’s close. Portuguese bonds rose to 2.393 percent after finishing the previous day at 2.337 percent, while Greek 10-year debt traded in the secondary market around 3.719 percent, higher than 3.658 percent at the prior close.