Spanish Yield Rises to 5-Week High on Instability After Election
- Rajoy left with limited options to forge governing coalition
- Spain-Italy yield spread widens to most since mid-November
Spanish Election Pushes Bond Yields to Five-Week High
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Spain’s government bonds fell, pushing the 10-year yield to the highest in five weeks, after an indecisive election left Prime Minister Mariano Rajoy with limited options to forge a governing majority, threatening a period of instability.
The yield difference between Spanish and similar-maturity Italian bonds widened to the most since mid-November amid muted declines in the rest of the euro-area’s peripheral debt markets. While Rajoy’s People’s Party placed first in Sunday’s election, earning the right to try to form government, the results suggest the only party able to form a majority with him in the 350-member parliament would be the Socialists, the PP’s historic rivals.