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Debt escalation: the Spanish bond exceeds 3.6% and that of the US is close to 4%

Date: March 22, 2023 Time: 11:30:34

The real risk that central banks do not end interest rate hikes before next summer puts pressure on debt. The interest on the ten-year Spanish bond already exceeds the threshold of 3.61%, a level that is heading towards the maximum of 2014. 3.65%. This continues the rebound in sales experienced last Friday (its price works inversely to profitability) when the publication of key macroeconomic data for the Federal Reserve set off alarm bells among investors.

The PCE price index, which measures personal consumption spending in the United States, rose 4.7% year-on-year and 0.6% compared to the previous month, dragging the main Western stock markets to losses last Friday. An effect that has also spread to bonds. The alert band is also observed in the ten-year US debt, which is on the edge of 4%. If it reached it, it would return to the highs of 2008, after exceeding it in November 2022.

The tension in the debt markets is palpable. In Italy, also highly exposed due to its high indebtedness, the bond has also threatened to break the 4.4% level, which it already reached two weeks ago, and could reach a decade high. The pace is set by the ten-year ‘German bund’, whose yield rises to 2.5760%, the highest interest rate since July 2011, fueled precisely by the possibility that the European Central Bank (ECB) will continue to rise of types. This has resulted in an increase in the Spanish risk premium, consolidating above 100 basis points, after falling below it throughout February.

The personal consumption figure has also been joined by weekly subsidy requests in the North American country that are lower than estimated by analysts, up to 192,000, compared to the 200,000 expected, and even lower than those of December (195,000). . The latest minutes from the Federal Reserve have not helped either. The Fed is willing to continue with its restrictive monetary policy and take a step forward in reducing its balance sheet to contain the CPI, which could place benchmark interest rates above 5%.

In the Old Continent, inflation in the euro area stood at 8.6%, which, although it represents its third consecutive monthly drop and its lowest level since June, is still high. Two readings can be extracted from this publication. One that prices are progressively contained. The other is that it remains more than four times above the Frankfurt-based body’s target. “These data remind us that the fight against inflation in the US has not yet been won and that we will even see a slight rise in prices in the coming months,” they point out from the Spanish Institute of Analysts.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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