After the election on Sunday of the right leaning PP lead by Rajoy, yields climbed on Monday. Stock markets opened lower again today as fears of the eurozone debt crisis continues.Spanish bonds rose to 6.54% up from 6.345% on Friday.
Calls for the isse of eurbonds by the EU commission has been dismissed by the Chancellor of Germany and the Federal government. The Germans dont believe that this will get to the root of the crisis, and instead they are calling for greater fiscal consolidation and treaty changes.
The German Chancellor Angela Merkel has called for ever closer union of the EU. Fiscal and monetary union will be tightened with further regulatory power given to the EU commission to ensure compliance.
The Chancellor stated on Friday that if the EU and the Eurozone fail, Europe will be in its worse crisis since World War 2. She is also pushing for a financial transaction tax which Cameron and the UK opposes as 80% of financial transactions take place in the city of London.
The new Spanish government will have to wait until December 13 to be sworn in the bond markets have so far shown no patience in pushing up the borrowing costs of Spain.