Spanish Bonds Fall, Yields Post Largest Increase Since the Acute Phase in August

“Spain’s government bonds fell, with 10-year yields heading for their biggest weekly increase since August, after a report showed the jobless rate climbed to a record last quarter.

Spanish 10-year securities dropped for a second day as the data added to evidence the economy is worsening after its central bank said this week gross domestic product shrank for a fifth quarter. German bonds gained as French household sentiment worsened and European stocks declined, boosting demand for the region’s safest assets. Italian securities fell as the nation sold a combined 4 billion euros ($5.12 billion) of inflation- linked and zero-coupon debt.

“Contracting pressures in the economy remain persistent” in Spain, said Elwin de Groot, a senior market economist at Rabobank Nederland in Utrecht. “It will be very hard for the Spanish government to achieve its budget targets. It is likely to be negative for the bonds.”

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