'The Markets' sweating the rise of another anti-austerity party in Europe

[marmar]

(Bloomberg) -- Spain’s bonds are set to underperform their Italian peers for the fifth time in six weeks amid concern the rise of a Spanish anti-austerity party might lead to the sort of turmoil that followed Syriza’s victory in Greece.

Podemos, which has pledged to restructure $1.1 trillion of Spanish public debt, widened its lead over Prime Minister Mariano Rajoy’s People’s Party, according to a survey this week by the state polling company. By contrast in Italy, itself no stranger to political upheaval, Sergio Mattarella was elected president on Saturday as a candidate backed by Prime Minister Matteo Renzi. That marked a victory for the Italian premier, who overcame tensions within the governing coalition.

“The reason for Spain underpeforming Italy is totally related to investors’ concerns about the political landscape, in relation to what is going on in Greece,” said Luca Cazzulani, a senior fixed-income strategist at UniCredit SpA in Milan. “It’s something that will probably carry on in the near term. The link investors will make is that the next country with a strong anti-austerity movement will be Spain.”

The yield on Spanish 10-year bonds rose 1 basis point, or 0.01 percentage point, to 1.46 percent as of 1:18 p.m. London time, set to end the week four basis points higher. The rate on similar Italian bonds also rose one basis point though was set for a four-basis-point decrease in the week to 1.55 percent. ...............(more)

The complete piece is at: http://www.bloomberg.com/news/articles/2015-02-06/spanish-bonds-underperform-italy-s-as-podemos-gains-popularity