Spain Pledges to Fight High Risk Premium


At the end of a long cabinet meeting, Spain’s minister of finance Luis De Guindos said that the country will take measures to reduce the risk premium.

Luis de Guindos said that the current situation is unsustainable, and that he wants to send a calming message to the markets. EUR/USD is a bit higher, but stays in the tight range, awaiting the Greek elections.

He also mentioned the Greek elections as a source of tension. Spain’s prime minister Mariano Rajoy refused to answers questions at the end of the meeting.

Spain’s 10 year bond yields stand at 6.91% after hitting 7% earlier in the day. The 7% mark is the dangerous level where other countries received bailouts. Spain’s announced program is considered a bailout “only for the banks”, but it has so many holes, that it hasn’t convinced markets.

The risk premium, which is the difference in spreads between the Spanish and the benchmark German bunds, is at around 550 points (5.50%).

EUR/USD dollar ticked up within the narrow range of 1.2540 to 1.2587.

While it is easy to hide behind another country’s problems, De Guindos is certainly correct regarding the market tensions concerning the Greek elections.

See the 3 scenarios for the Greek elections.

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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