The pressure in the debt market will make Spanish financing more expensive

Madrid, Jan 22 (.).- The yield of sovereign bonds both in Europe and in the US have been under strong pressure for several weeks that has pushed them upwards, a fact that Spain has not been spared either, which has seen how the Treasury, in its latest auctions, has had to raise the interest offered to investors.

Experts explain that this tension in the debt market is due to investors’ fear that high and sustained inflation over time could condition the monetary policy decisions of central banks.

Although the European Central Bank (ECB) has ruled out raising interest rates and, for now, will only reduce its debt purchase program, the US Federal Reserve (Fed) could raise them up to four times, according to what it already discounts the market.

In this context, the ten-year US bond has come to trade above 1.8% this week, the highest since January 2020.

In the Old Continent, and influenced by the dynamics of the US, the ten-year German bond, considered the safest in Europe, has risen strongly in previous sessions.

Even this Wednesday, it traded in positive rates for the first time since 2019, which means that investors stop paying the German government for their debt.

Following the same trail, the ten-year Spanish bond has climbed this week to 0.7%, which is its highest level since May 2020.

Although at the end of the week, the profitability of the debt softened, and even the German bond returned to negative rates, the strong previous rises have been noted in the auctions held by the Spanish Treasury this week.

In them, the agency has had to raise the yield applied to the debt placed among investors, that is, pay more for it.

In this sense, Pedro del Pozo, from Mutualidad de la Abogacía, explained in statements to Efe that a normalization of monetary policy in Europe is expected, with the reduction of debt purchase programs by the ECB, which, not However, it will not raise interest rates for now.

That normalization, he assured, will have a clear effect on the yield of the bonds, and could bring the German close to zero.

A fact that, in his opinion, is still a normalization, since what is “abnormal” is that the “bund” remains negative “sine die”.

With regard to Spain, he recalled that this year the ECB will no longer buy the entire net issue of Spanish debt, and the market will be in charge of placing it, which could have an effect on risk premiums, and therefore cost more or less financed, “depending on how Spain does things”.

According to his estimates, during the year, the yield on the Spanish bond could climb to around 1 or 1.10%, and the , which is defined as the premium paid by a country to finance itself in the markets, in the 70-80 basic points.

For his part, AXA (PA:) IM Information Director and member of the ECB bond market contact group, Alessandro Tentori, explained that the effect of rising bond yields on the economy is not until now worrying, since only “quite contained” increases are being registered.

He added that real yields remain in “deeply negative” territory, and that ultimately this is what matters most for financial conditions, which is “the backbone of investment and consumption decisions.”