Spain to France: hold my cerveza
TLT•Spanish Prime Minister Pedro Sanchez called a snap election for November as he trails in polls, adding to political uncertainty alongside France's fiscal drama. The U.S. 10-year Treasury yield reached 5.3493%, a new 24-year high.
1. Political uncertainty grows
Sanchez called a snap election for November while trailing in polls. A defeat would leave markets facing political uncertainty in two of the euro zone's four biggest economies at once.
2. Bond markets under pressure
The premium on French 10-year bonds over German debt narrowed to 137 basis points on Monday, from 85 basis points a month earlier. The euro recovered above $1.12 after falling to $1.1161 overnight. The U.S. 10-year Treasury yield hit 5.3493%, a new 24-year high.
3. Rates and market outlook
The European Central Bank has raised rates twice this year, while euro zone inflation is 3.8%; an end-of-year rate rise is 83% priced. Nasdaq closed at a record, and European stock futures rose 0.4%. Brent crude was near $100 a barrel.
