The Corner

Greece, Again

A tough day in the markets for Greek debt again today:

There’s lots of attention on the long-end of the Greek debt curve, and rightfully so. That’s where the government needs to get a lot of funding work done in the next couple of months, and yields remain high, surpassing 7.1% at one point Tuesday. But action on the short-end is also gaining a lot of attention. Amid reports of Greek bank selling, short-term Greek bond yields have soared in the past two days. On Wednesday Greek treasury bills with a rough six-month equivalence yielded as much as 6.4%, according to RBS Research. That would be about double what T-bills yielded the morning before and almost six percentage points (or six hundred basis points in Wall Street lingo) more than similar German debt. Later on Wednesday, October 2010 T-bills sported a yield between 5.2% and 5.6%, underscoring the volatility at the short-end of Greece’s government debt market. These are giant yields for short-term government debt, especially in the euro-zone. They are signaling one of two things: A looming default or a great buying opportunity.

Expect “speculators” to be blamed. After all, look what else they have supposedly been up to (via the Daily Telegraph):

Mr Sarkozy said last month he did not have “half a minute” to spare on “idiotic” rumours over the state of his marriage after they appeared on Twitter and the blog on the website of a respected weekly newspaper. But just when the buzz over the rumour that Carla Bruni-Sarkozy had an affair with the musician Benjamin Biolay while her husband sought solace in the arms of Chantal Jouanno, his ecology minister, began to fade, the presidents’ aides launched a virulent counter-attack this week.

Pierre Charon, Mr Sarkozy’s chief communication adviser, promised to wage a campaign of terror against rumour-mongers, apparently pointing the finger at the president’s former justice minister, Rachida Dati, and suggesting there may be a concerted plot by foreign “financial” circles to discredit the president because he preaches regulating global capitalism.

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