Sovereign bonds are increasing their profitability on the secondary market, but not with the same intensity. US debt is among the most volatile in recent weeks, which makes sense after the November 5 election results. He The ten-year US bond exceeds 4.45%while European stocks are tightening at a slower pace. As an example, the Spanish ten-year bond It is listed with a profitability of 3.08%. In other words, the difference with the American bond exceeds 135 basis points, which implies observing the greatest distance between the two references since April 2021.
The performance of bonds on the secondary market reflects, among other things, the risk aversion of investors towards these assets. And for now, it is the American economy that is attracting the market’s attention because of the future that is taking shape in the United States and the consequences it will have on the rest of the world. The risk premium between the United States and Spain (difference between the yield on their ten-year bonds) reached highs in almost four years as an environment of greater uncertainty for the United States and higher interest rates following Donald Trump’s victory is taken into account.
“The Trump administration’s policies are likely to be more inflationary,” said Alex Monk, a director at Schroders. “Treasury bond yields [de EEUU] rose across the curve amid expectations for an extension of spending cuts taxes, higher customs tariffs and stricter immigration this implies a higher term premium,” added Anshul Pradhan, analyst at Barclays.
Since November 5, election day in the United States, the ten-year American bond has increased by almost 20 basis points while European bonds have reduced their profitability between three and six points over the same period. But all the debts of the Old Continent will not evolve in unison in 2024. Although it is the debt of peripheral countries which historically reacts in the most sensitive way to any negative news for the euro zone, this has not been the case in recent months. THE Spanish risk premium compared to the German premium It stands at 70 basis points with the German bond at 2.39%. This is not the lowest level of the year, given that this spread fell below 70 points in October, but it is far from the levels with which the year began, which implied a risk premium of 96 basis points.
The fact that the Spanish debt reacts with less virulence than the German debt, in addition to the North American debt, also responds to current German policy. “Trump’s victory in the US elections comes at the worst possible time for Germany, he adds. more uncertainty over its struggling economy“, commented Generali AM analyst Martin Wolburg about the breakup of the tripartite coalition in Germany which will lead to early elections on February 23. One of the points that remain unresolved in the country are the general budgets 2025 and the debt ceiling.
Although Spain also has its budgets for next year in the negotiation phase, it is French policy which attracts the attention of analysts with more intensity after the German case. “We observe that the durability of French public debt will remain worrying. This could lead to a further widening of yield spreads on peripheral government bonds and weigh on the euro,” commented Claudio Wewel, currency strategist at J. Safra Sarasin Sustainable AM.
On the other hand, the profitability of Spanish debt is also increasing at a slower rate than that of the United Kingdom. The ten-year British sovereign bond exceeds the American one by touching 4.5%. This implies that the risk premium between the two debt securities is at historic highs since there is a record, 1997 according to Bloomberg. And, once again, it is the evolution of the national debt in relation to the evolution of the gross domestic product in the United Kingdom which worries investors. “It is plausible that part of the slowdown [económica] “This was due to the high uncertainty at the time as businesses and households speculated about possible budget changes ahead of budgets,” said Luke Bartholomew, ABRDN’s chief economist.
