The spread between the bonds of debt-troubled governments and German bunds have grown to two-month highs on fears that elections could lead to anti-austerity pledges that derail deficit-cutting efforts.
“People are a bit more aware of the risk of European elections, which they surprisingly were not paying much attention to last week,” said Citi analyst Alessandro Tentori.
The yield on Spanish 10-year bonds climbed 2.76 per cent yesterday to 3.09 per cent. Just last week the yield was at 2.86 per cent.
Similarly in Portugal, where a full bailout was required in the wake of the financial crisis, 10-year yields rose 0.11 per cent yesterday to print 2.77 per cent last night.
And in the heavily-indebted Mediterranean state of Greece, 10-year yields edged up 0.16 per cent to 6.78 per cent. Earlier in the month the Greek yield was below 6.1 per cent, yet it is still down sharply from last summer’s level of 11.5 per cent.