STOCK MARKET WATCH -- Friday, 23 May 2014

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17. Spanish Reap Growth Reward as Italy Hurt by Selloff: Euro Credit

http://www.bloomberg.com/news/2014-05-23/spanish-reap-growth-reward-as-italy-hurt-by-selloff-euro-credit.html

Spain’s borrowing costs are lower than Italy’s by the most in more than two months, reflecting the diverging strengths of their economies after investors recoiled from the euro region’s most indebted nations.

The extra yield on Italian 10-year debt over Spanish securities reached 21 basis points today, the most since March 5. Over one week, Spain’s borrowing costs increased the least in the euro region, by one basis point, compared with 10 points point for Italy, Bloomberg World Bond Indexes show.

“There is further gain to be had with Spanish bonds,” Richard Kelly, a senior fixed-income strategist at Toronto-Dominion Bank in London, said two days ago. “Overall Spain is outperforming in an economic sense.”

Spanish debt thrived during a four-month rally of euro-region bonds that ended last week and proved resilient to concerns over politics and monetary policy. The securities barely budged during the selloff that started in Greece ahead of elections to the European Parliament over coming days and the European Central Bank’s next rate decision.