ECB’s message carries risk premium but not 10-year bond or stock market yield


The required return on Spanish loans is once again over 3%, a record since 2014.

Luis de Guindos, Vice President of the ECB;  Klass Not, from the Dutch central bank
Luis de Guindos, Vice President of the ECB; Klass Nott, from the Dutch central bank, and Christine Lagarde, President of the ECB.Sam van der WaalEFE
  • A divided ECB prepares to help southern Europe and avoid a new debt crisis

Message he launched on Wednesday B.C (The intention to reinvest the debt of the pandemic procurement program in the debt of southern countries and the mandate to create an anti-fragmentation system) caused a reduction in yesterday Required return for a 10 year spanish bond up 2.8%, but this Thursday morning It rose again to 3.03%.

The return demanded by investors from a public debt security is higher than default risk o mso Uncertainty Since it involves the public finances of that country, the increase in yield is negative from the point of view of Spain’s image and makes this financing channel more expensive for the state.

Additionally, if there is an increase in the expected return on the Spanish bond and no proportionate increase in the expected return on its German counterpart, the bond, a Spanish risk premium rebound -which accurately measures this difference-. However, for the time being, the risk premium is down 1.6% today 122.1 basis pointsSince Expected returns on German bonds have skyrocketed this thursday MS of 11%up to 1.83%. As German bond yields rise higher than those of Spanish ones, the risk premium also falls.

There has also been an increase in the interest paid by Greek Bond at 10 a.m.which increased by 3.2% to 4.36% and in ItalyWhich rose 3.5% to over 4%.

This means that the declaration without the details of the ECB This has not acted at the moment to stop the yield on debt from rising. Sovereign of Southern Europe, however there is no new increase in risk premium for now.

Various analysts have already warned after the emergency meeting organized by the Governing Council that the reinvestment of profits from the Epidemic Procurement Program (PEPP) loan it wasn’t going to be enough to prevent an increase in yields on the Southern Debt and also warned that Internal divisions within the ECB would make a deal difficult to design a new anti-fission system, especially since economically strong countries would demand Condition,

luis de guindosoVice President B.CWanted to launch a security message in an interview with Greek media ta niswhere you said “The markets should leave no doubt about how determined we are to tackle fragmentation.” The members of the central bank are carrying out an exercise similar to the one carried out by Mario Draghi in 2012, When promising to do “whatever it takes” (his famous “whatever it takes”) he managed to calm the market without moving a single euro.

Now, though, perhaps the words of Christine Lagarde or Luis de Guindos not as effective Like then.

loss Market The news from Frankfurt and, above all, the decision by the United States Federal Reserve (Fed) to raise interest rates by 0.75 points, the highest increase since 1994, has not been received with enthusiasm. Ibex 35 drops 1.56% mid session and stands at 8,046 integers. Eurostocks also fell (2.7%) and the German DAX 30 index (-2.9%).

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