Spanish bond yields exhibited stability on Thursday, demonstrating resilience amidst the persistent political ambiguity surrounding Catalonia. Market participants seemingly maintain a composed outlook, as evidenced by the consistent performance of the benchmark 10-year bond yield.

The yield on the aforementioned bond experienced minimal fluctuation, hovering around 1.4%. This suggests that investors are not demanding a higher premium to hold Spanish debt, despite the potential risks associated with the Catalan situation.

Several factors may be contributing to this stability:

• The European Central Bank’s (ECB) ongoing bond-buying program provides a significant backstop for Spanish debt.
• Expectations that the Spanish government will maintain control over the situation in Catalonia.
• A broader positive sentiment towards Eurozone economies.

Analysts suggest that while the Catalan issue remains a concern, it is not currently perceived as a major threat to the Spanish economy or its debt sustainability. However, they caution that a significant escalation of the situation could potentially trigger a negative reaction in the bond market.