Greek Spreads Tighten By Less Than 100 Bps, Vigilantes Refuse To Uncall ECB's Bluff
As the chart demonstrates, even after bailout #4, 10 year spreads are just wider than where they were when this latest risk-flaring episode commenced, and are now in the 6.6% range, a spread to bunds of about 350 bps. As the so-called rescue mechanism is supposed to come in at 5% for the 3 year and presumably cheaper down the curve the bond market is once again not convinced that this weekend's videoconference festivities are anything but hot air. That the kneejerk reaction on Monday was unable to tighten spreads more is very concerning, and likely indicative that Greece will activate the rescue plan within the week. Next catalyst: tomorrow's 6 and 12 month auctions.
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