LONDON: Government borrowing costs in Europe's indebted southern countries shot up on Monday as investors began to worry that a vote in Greece could see it become the first country to leave the euro currency bloc. Euro zone debt markets saw a glimpse of the contagion that spooked investors at the height of the debt crisis in 2012, but borrowing costs in Italy, Spain and Portugal were still less than half the levels seen back then.
Just over two years ago I warned that Spain posed a significant threat to the EU area economies. This was a very popular stance, and since I'm more of a medium to long term strategist and Spain didn't experience any immediate pain, my stance was considered even more morose. Well, luckily, I supplied ample research to paying subscribers who were well prepared for what is now evidently coming down the pike.
MADRID (Reuters) - More than six million Spaniards were out of work in the first quarter of this year, raising the jobless rate in the euro zone's fourth biggest economy to 27.2 percent, the highest since records began in the 1970s. The huge sums poured into the global financial system by major central banks have eased bond market pressure on Spain, but the cuts Madrid has made in spending to regain investors' confidence have left it deep in recession.
Yields on 30-year and 5-year bonds in Spain hit a euro-era record on Friday as the Valencia region of Spain filed for financial assistance.
Bloomberg reports Spain Bonds Slide as Valencia Aid Request Deepens Crisis
FROM Newsbook:European Union leaders have breathed a sigh of relief. Olli Rehn, the EU’s top economic official, said it was a “responsible step for securing the financial stability of the euro zone”. José Manuel Barroso, a former Portuguese prime minister who is now president of the European Commission, said the request would be “processed in the swiftest possible manner”.
Bond Rout in PicturesGerman 10-year bonds hit a yield low of .048% on April 16. Since then it's been a pretty steep uphill climb in yield (down in price). Germany 10-Year Bond YieldSpain 10-Year Bond Yield
LONDON: A worldwide sell-off in government bonds deepened on Wednesday, with the rise in long-term borrowing costs to their highest level this year spreading unease across all assets and putting stock markets under pressure too. European equities stabilised after the previous session's heavy losses as upbeat regional economic and corporate reports helped. But bond yields continued to push higher, with investors reassessing the early year deflation scare in the light of a 50 percent rebound in oil prices from January's trough.
Spanish borrowing costs have soared to a euro-era record high on a market beset by doubts over a vast rescue loan for the country's banks and by fears of a Greek exit from the eurozone.The euro came under more pressure in early trading Wednesday, unconvinced by the deal struck by the 17 eurozone nations over the weekend to extend Spain a banking sector rescue loan of up 100 billion euros ($125 billion).
EU Throws Spain Two Deathlines; Spanish 10-Year Yield Tops 6.7%;
ECB Rejects Madrid Ponzi Refinancing Scheme
The markets are reeling in the wake of rejection of Spain's Ponzi Recapitalization Scheme by the ECB according to the Financial Times.