Wednesday, January 27, 2010
The Greek Euro. It's Only A Question Of Time.
The rumors that China might want to buy Greek bonds have been denied by China. The Greek Euro is unloved and Greece is having to pay ever higher rates to finance its debts. This is getting like Britain trying to stay inside the ERM. It's only a question of time and the interest rate demanded goes so high, it becomes inevitable that Greece will be out of the Euro.
From the FT.
Greek benchmark 10-year bond yields, which have an inverse relationship with prices, rose to 6.42 per cent on Wednesday, an 18 basis point rise on the day and more than 150bps higher than at the start of December last year.
Greek yields are trading 332 basis points over Germany, up 28 basis points on the day, as investors demanded a much bigger premium to buy Greek debt.
The chart at the top is the euro valued in US$ for the last six months. The Euro is close to going through psychologically important support levels, and heading lower, undermined by the Greek crisis.