PM Sánchez’s exit odds rise as Spain nears snap vote

There’s quite a bit of fresh pressure on Pedro Sánchez’s chances of remaining Spain’s prime minister after a sharp repricing in the market ahead of the nearing general election.

The market on Sánchez leaving office by December 31 this year now puts the ‘Yes’ outcome at 24%, down some 26%. The market has attracted more than $792,000 in total trading volume, and this shows a sustained interest in the PM’s position.

Importantly, the political timeline is accelerating, and the odds seem to follow. On October 5, Sánchez called a snap election for November 29, after the country’s parliament rejected two emergency housing measures. This is a massive issue for Spanish voters, and it’s likely to affect Sánchez’s political standing – and with that, the odds in the market.

This acceleration can also be seen in the market predicting Spain’s next prime minister. Alberto Núñez Feijóo, leader of the conservative People’s Party (PP), is now priced at 82%, but Sánchez is down 4% in a day to 18%.

With more than $1.3 million in total volume, this market favors a change in leadership. Yet, with Sánchez bringing the housing decrees back to the table, the odds may theoretically still change.

Housing crisis adds pressure ahead of the vote

There’s a good reason for traders to keep a keen eye on and keep reassessing the political outlook. For now, some major outlets accuse the PM of taking advantage of the housing crisis. Reuters, for example, writes that Sánchez’s decision to “bring the election forward to November 29 from next year - appears to ​be based on a calculation that anger over a mounting housing crisis will be directed more at his opponents than at his own party.”

The housing crisis worsened after 87-year-old María del Carmen Abascal was evicted, and later died. This became a symbol of Spain’s housing problems. Thousands of people demonstrated in Madrid on October 8.

Therefore, many argue that Sánchez is betting that housing will mobilize left-wing voters and that his opponents aim to capitalize on public dissatisfaction.

For traders, whether something is calculated or not doesn’t really matter. The effect of each move does. And with the matter this complex and sensitive, a single move could potentially create large swings.