The Greek 3Y-10Y yield curve is back over 400bps inverted this morning as bond (and stock) prices re-tumble following a new reports. As The FT reports, forecasting group Oxford Economics says it has carried out an "in-depth" analysis of opinion polls ahead of Greece's snap general election on January 25, which shows that the radical Syriza party is on course to win a "clear mandate" to push through anti-austerity policies. Will German worry now?
The Greek yield curve has moved even more inverted...
[Oxford Economics] analysis shows that Syriza's support is sufficient to secure a workable majority in Greece.The report says:
36% of the final vote is the approximate threshold beyond which a strong anti-austerity government is plausible. Syriza's performance has been consistent with this in each of the last 20 opinion polls, and over 40% of the vote on average in the last five.
The report, written by Oxford Economics' Gabriel Sterne, points out that the ruling New Democracy party could close the gap, if a tactic pays off to portray the election as effectively a referendum on an exit from the euro.
But Mr Sterne adds:
But the binary (in or out) nature of the vote decision may also help Syriza to achieve a decisive victory by squeezing out smaller parties (eg. Independent Greeks), as voters herd to the big two.
And as Reuters adds, Syriza's leader Tsipras has warned Draghi that is QE is undertaken, it must include buying Greek bonds...
Greek leftwing opposition leader Alexis Tsipras said the European Central Bank (ECB) could not exclude Greece if it decides to move to a full "quantitative easing" program to stimulate the euro zone's faltering economy.
Tsipras said he hoped ECB President Mario Draghi would decide to go ahead with the program and said Greece could not be shut out, as some economists and politicians from countries including Germany have suggested.
"Quantitative easing by the ECB with direct purchases of government bonds must include Greece," Tsipras said.
In a speech laced with barbs against German Chancellor Angela Merkel and finance minister Wolfgang Schaeuble, Tsipras said his party would roll back many of the austerity policies imposed by the bailout "troika".
"Austerity is both irrational and destructive. To pay back debt, a bold restructuring is needed," he said.
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For now, bonds don't seem to care. As bond prices slide to new lows..