Peripheral bonds lagged the rally in German Bunds this week. The Spanish election outcomes and some Greek headlines pushed spreads wider at the start of the week. On Wednesday peripheral debt rallied as Greek officials claimed progress in the negotiations, but this was quickly denied by the creditors. Portuguese bonds have returned 3% this year, Italian bonds 1.7%, Irish bonds 0.7% and Spanish bonds 0%.

Spain



The ruling Partido Popular suffered losses in last weekend’s local and regional elections. It lost the majority in all regions where it had one. Podemos gained in the regional elections as well, but remained clearly smaller than the Socialists. The formation of a stable coalition government could be difficult in some smaller regions, especially ahead of the national elections towards the end of this year. These elections are also unlikely to produce a majority for any single party.

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