Freefall: Greek Bonds Tumble, 3 bps Away From Critical 450 bps Threshold, ASE Index Plunges 5%

Panic in Greece as total freefall envelops both the bond and the stock market. The 10 Year is now at an absolute record 447 bps spread to bunds, or in the mid 7's in absolute terms. The stock market has tumbled by about 5% and Greek CDS have surged to a record.

From Bloomberg:

“There is now increasing uncertainty surrounding Greece’s ability to raise the required amount of funding without recourse to the emergency lending facility provided by euro member states and the IMF,” Steven Mansell, a strategist at Citigroup Inc. in London, wrote in a report. “This raises the question of whether or not tensions will also rise in other peripheral markets. We think that some form of contagion is inevitable.”

Finance Minister George Papaconstantinou said Greece doesn’t need additional austerity measures, after the European Union and the International Monetary Fund agreed terms for an emergency support package last month. Europe’s economy unexpectedly stagnated in the fourth quarter, and Japanese machinery orders and U.S. consumer credit slumped, adding to investor concern that the economic rebound may falter.

If Greek spreads move just a little wider by 3 bps, which we expected once Greece gave out the 450 bps bogey of total freefall, it is pretty much game over for Greece. Next up: PIIS