“Now not right time for euro bonds” mantra is bizarre. Assumes a right time. So, incur huge costs avoiding them now only to do it anyhow. hm
So German econ doesn’t exist in parallel universe after all, if ZEW correct. May finally shake Berlin into action if real data follow suit
Stressmetrics of the day? Spain borrows for 18 months at 5.107% and Denmark borrows for two years at -0.08%…
Danish govt debt auction had 2014 bond yield of -0.08%… nice
Financial markets are odd sometimes. For weeks they have fretted about the outcome of the Greek election and its impact on the future of the euro zone as a whole. But today they appeared to dismiss the outcome despite a result that was about as positive as global investors fearful for euro zone stability could have hoped for. So what gives?
The logic behind the weeks of trepidation was fairly simple and straightforward. After an inconclusive election on May 6, a second Greek poll on June 17 was due to give a definitive picture of whether Greeks wanted to stay in the euro and with all the budgetary conditions necessary to keep EU/IMF bailout funds in place. If a victory for parties wanting to scrap the bailout agreement and austerity led to a halt of EU/IMF funds, the fear was that Greece would inevitably be forced out of the single currency bloc in time too. And if that unprecedented event happened, then a chain reaction would be hard to avoid. If one country goes back to its domestic currency, despite all its debts being denominated in euros, investors would then find it impossible not to assume at least some element of euro exit risk for fellow-bailout recipients Portugal and Ireland and possibly even Spain and Italy, where doubts remain about their market access over time.