More movements within AAA-rated country bond spreads

The differing outlooks of the various Euro-zone countries have started to be reflected even more clearly on the bond market. This phenomenon is increasingly touching the core countries as well. At the same time as bad news has been stemming from the Netherlands, Finland has proposed new measures to turn its debt to GDP ratio lower again.

 The Dutch economy has fallen back to recession, the political uncertainty has increased as the minority government is finding it increasingly hard to find support in the parliament, while the public sector deficit is set to remain high also next year.

 Meanwhile, the Finnish government presented a further EUR 2.7bn of savings measures yesterday, underlining the determination of the government to stop the rise in the debt to GDP ratio. It was also positive that new structural reforms were proposed to increase the time of years people spend working. Disappointing was the fact that the savings measures relied more on tax hikes than spending cuts, which will burden the growth outlook.

 The outlook for Finnish bonds is thus notably brighter than that for Dutch bonds.

 Read more in the attached file.

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