Spanish Bonds Fall as Oil, Stocks Slide Weigh on Peripheral Debt

  • ECB president speaks Monday after signaling more stimulus
  • Portuguese securities also decline; bunds little changed

Spanish government bonds fell, widening the yield premium investors demand to hold them over benchmark German bunds, as a drop in oil prices and stocks weighed on the bonds of Europe’s higher-debt and -deficit nations.

Portuguese securities also declined as investor weighed the impact of falling prices on the region’s growth and monetary policy. European Central Bank President Mario Draghi last week sent two-year yields on the euro region’s semi-core nations to the lowest on record after he said the ECB may need to bolster its already unprecedented stimulus as soon as March. He is set to speak in Frankfurt late Monday.

“The key drivers will remain equities and oil prices, especially for the periphery,” said Luca Cazzulani, a senior fixed-income strategist at UniCredit SpA in Milan. “After what we heard from Draghi, it’s hard to see real volatility” in shorter-dated German securities.

Spanish 10-year bond yields rose one basis point, or 0.01 percentage point, to 1.74 percent at 10:01 a.m. London time. The 2.15 percent security due in October 2025 fell 0.1, or 1 euros per 1,000-euro ($1,082) face amount, to 103.63. The yield spread over German peers increased two basis points to 1.27 percent after touching the widest since September on Jan. 21.

Portugal’s 10-year bond yield climbed two basis points to 3.05 percent. Similar-maturity Italian bond yields were little changed at 1.58 percent, while Germany’s 10-year bund yielded 0.48 percent.

The Stoxx Europe 600 Index of shares fell as much as 0.8 percent, while West Texas Intermediate crude for March delivery dropped 3 percent to $31.23 a barrel on the New York Mercantile Exchange.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE