The interest of the brand new minimum Spanish debt – The País.com (Spain)

The interest of the brand new minimum Spanish debt – The País.com (Spain)

New banknotes of 10 euro. / EFE

The required return on secondary debt markets to Spanish ten-year bonds on Thursday marked a new record low. Thus, the interest of these bonds, which evolves in the opposite direction of its price, has fallen to 2.030% early, an unprecedented level. The improvement is due to release on the eve of the minutes of the Federal Reserve of the USA, which reassured investors about a possible rise in its benchmark interest rates sooner than expected. This has also set the pace in all markets (Stock and currency) on Thursday.

“In the minutes of the Federal Reserve is clear that the authorities of the United States do not want to rush to the time to begin the process of rising rates and are not given all the circumstances to start the cycle, “summed Victoria Tower, responsible for analysis of Self Bank. With this support, the New York Stock Exchange Monday that ended with significant rallies that this morning have moved to Europe. “Even the (bad) data published in Germany seem to be influencing the minds of investors,” he added. German exports have fallen by -5.8% in August, its worst drop in five years. Although negative data, another reading which makes them positive in the eyes of the market is increasing the pressure on the ECB to decide to start buying massive debt.

Another consequence that caused Acts has been the rise of the dollar, the euro exchange rate rose to 1,276 units, in contrast to 1,25 with which it started the week.

With the decline of this Tuesday, the Spanish debt narrowed the differential with the bonus of Germany, reference by stability, less than 120 basis points. Specifically, this premium, known as risk premium has dropped to 117 basis points from 121 points in the opening. In the secondary market is where Treasury securities are traded once issued. Until now, the minimum required return Prve in the Spanish bond was 2.039% that got to play on August 9.

The cut of the returns required to Spanish debt, a phenomenon which is replicated the primary market where the Treasury makes its emissions, is allowing the State to reduce the cost to borrow money. In fact, the returns are also auctions touching lows, while the central bank is exploring new ways to finance such as the inflation-linked bonds. The decline also could not have come at a better time, since the total public debt outstanding is at maximum.

Long before the Federal Reserve, the origin of the recovery in the markets Spain debt is the ECB. Also, in markets where liquidity is abundant. In this respect, even the IMF has warned that the stimulus measures aimed to vigorous approach to banking, are impacting more on financial markets to revive credit. For this reason, from the institution he leads Christine Lagarde urged the industry to “stop activities that are now profitable by low funding costs, such as investment in government bonds, and relocate those resources for other activities.”