Traders see Sánchez leaving as Spain's prime minister around mid-January, not by year-end

Four weeks before Spain's Nov. 29 general election, traders expect Prime Minister Pedro Sánchez to leave office, but probably not before the end of the year. Bets that he is out by Dec. 31 sit at unlikely, while bets on a departure by mid-January are a toss-up and by the end of January are likely.

Taken together, the bets point to a central expectation of mid-January for his exit, with the most likely window running from Dec. 31 to Jan. 15. The range stretches from a departure before Dec. 31 to none by Jan. 31.

A separate question on who will be Spain's next prime minister tells a similar story. Alberto Núñez Feijóo, leader of the conservative Popular Party, is the clear favorite, while Sánchez is a long shot to be the next prime minister.

The year-end bet has moved within a fairly narrow band in recent weeks. It dropped sharply on Oct. 19 and 20, then held steady through Oct. 24. It jumped on Oct. 25 but gave back that gain the next day. It edged higher through Oct. 30 and slipped slightly on Nov. 1. It remains in unlikely territory.

Sánchez announced on Oct. 5 that Spain would vote on Nov. 29, according to La Moncloa. The call followed parliament's rejection of his government's housing measures. Calling an election does not by itself count as his removal, and he remains prime minister.

The race pits Sánchez's Socialists against Feijóo's Popular Party. A Nov. 1 polling average from Polling Forecast put the Popular Party at 31.1% and the Socialists at 27.1%. Spain's public CIS poll in October, however, gave the Socialists a lead of 11.8 points, according to Cadena SER. The two surveys point in different directions.

What happens next depends on the vote and the talks that follow. An election defeat would not necessarily mean Sánchez leaves right away, because a successor must be able to form a government. An announced resignation or another qualifying removal before Dec. 31 would also count. The gap between the year-end and mid-January bets suggests traders expect government formation to run past the new year.