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| Europe |
| Traders Bet on a Default From Greece |
| 2010-04-23 |
| Greek bond prices posted a drastic decline Thursday as traders began betting a debt default is inevitable, even if the country receives a massive bailout. As a result, the yield on Greek two-year notes jumped to more than 12% from 8.3% Wednesday, according to Tradeweb. At those levels, the prices are suggesting that "even if [Greece] finds a solution, if you buy two-year bonds, you may not be getting all your money back," says Mark Schofield, global head of interest-rate strategy at Citigroup in London. Meanwhile, yields on 10-year Greek bonds rose to 8.92%, almost six percentage points over comparable German debt. That gap is the widest since Greek joined the euro zone. Just two weeks ago, that spread stood closer to four percentage points. The backdrop for the selloff was still more bad news for Greece. The European Union's statistical authority said Greece's 2009 budget deficit was worse than had been previously reported, and politicians in Germany ramped up their opposition to a Greek bailout. The woes in the Greek bond market also are spilling over to other European nations with fiscal problems, such as Portugal, Spain and, to a lesser extent, Italy. Many investors say there are just too many headwinds for Greece to overcome, and that even a bailout won't be an end to the crisis. "The problem is likely going to come back in 2011 and 2012," says Michael Hasenstab, manager of the Templeton Global Bond Fund. "You get in this vicious cycle, and it's a very difficult situation." |
| Posted by:Nimble Spemble |
| #2 TOPIX > GREEK DEFAULT IN BONDS MARKET MAY SIGNAL END OF THE EURO. |
| Posted by: JosephMendiola 2010-04-23 23:02 |
| #1 there's an old saying that when you see exponential growth, grab your lunch box and head for the hills. |
| Posted by: tipper 2010-04-23 11:17 |