Tremors in the Eurozone (Again)

The France OAT-German Bund 10-year blew out another 12 bps today.  This is off our charts going back to December 2012.   The FT reports,

“Markets underpriced the political risks in 2016 and they are determined not to do the same again,” said James Athey, investment manager at Aberdeen Asset Management. “Investors want greater rewards for the risks they see in French, Dutch, German and possibly Italian elections this year to destabilise the region.”

Mr Fillon dug in his heels on Monday, apologising at a campaign headquarters news conference for putting his wife and two children on the government payroll, but vowing to salvage his damaged presidential bid.

…The widening of the spread between Italian and Spanish debt is also being watched closely. While the Spanish economy, the region’s fourth largest, has staged a recovery in recent years, growth in Italy remains weak, its banking sector besieged, and unemployment high and rising. 

…“This is not just about politics,” said Mr Athey. “It is a confluence of politics and the fact that economic data in the eurozone has been improving, which makes investors think the ECB might be questioning how much stimulus is still required.”  – FT



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