Spanish 12-month Treasury bonds are currently offering 2.99% on the secondary market, where the securities are traded after being issued at auction. At this level, these debt securities are expected to the auction taking place this Tuesday, September 3; The Treasury will place, as it usually does once a month, 6 and 12 month debts on the same day.
The previous debt auction under the same conditions took place on August 6, and marked a before and after: for the first time since February 2023, The 12-month debt issue closed at an interest rate below 3% (in particular, the average interest rate remained at 2.954%). The secondary market faithfully reflected this situation: 12-month securities lost 3% at the beginning of August and have only recovered it occasionally since then. The investor returns from vacation without the security of obtaining a “guaranteed” return of 3%.
In a context of falling yields, it is predictable that this Tuesday this profitability will continue to fall; It is time to start assuming that renewing the Letters to an equal or higher level has become an impossible mission. In fact, Since last June, investors who renewed their letters have been doing so at lower interest rates.The 3.86% the state paid in October last year, the highest interest rate since the European peripheral debt crisis in 2012, now seems a long way off.
This diminishing returns behavior is a consequence of the change taking place in monetary policies. In Europe, the ECB already made its first rate cut in 8 years in June; in the United States, the Fed’s first rate cut is taken for granted in September.
