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It was just last week that we were highlighting how sovereign spreads in Europe were at or down near multi-year lows. Now, less than a week later, spreads in the region are on the rise.

News of a scandal involving Spanish Prime Minister Mariano Rajoy and his political party has increased uncertainty in the country and the region. Spanish sovereign debt has been especially hard hit, as spreads on 10-year paper relative to Germany widened out from 352 basis points to 375.3 bps. While spreads still remain near their multi-month lows, today's move is notable due to the fact that it is the largest one-day widening in Spanish debt since September.

(click to enlarge)

Source: Euro Spreads Widen