The recent market meltdown is caused by Italy bond yield which has increased more than 7%. What is the next country that may have its bond yield increased above 7% soon? Spain maybe the next... Here's why.
1. Currently, Spain 10-year bond yield is 5.82%, it will only need another 118 basis points to breach that 7%. Well, Italy bond yield used to be around 5.8% last month in mid-October. Then the pressure come to force its Prime Minister to resign. Within 1 month, Italy bond yield shoots up more than 7%.
2. Spain unemployment rate of about 22% is significantly higher than Italy's 8%.
3. Political scenario in Spain does not look good as well. The country will be having its election on 20th Nov, about 2 more weeks from now. Opposition party (Popular Party or PP) seems to have good chance to win. This is based on recent local and regional elections held on 22 May 2011, in which PP won 38% popular vote compared to 28% won by the current Socialist government.
This blog is related to observations regarding stocks traded in Malaysia. Disclaimer: The company analysis that appear in this blog is merely facts gathered from different sources and the author's personal view. It is not a buy or sell recommendation. The author do not guarantee the accuracy of the facts being presented. Please consult your investment advisors before acting on any information provided by the analysis above.
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