Remember January 15? That was the day Greece’s CDS curve inverted.
And February 9 was the day Portugal’s CDS curve inverted.
An inverted CDS curve basically indicates that the market believes there’s a higher probability of a default in the short-term than in the longer term — the cost of protection in the short-term is higher.
Greece’s remains stubbornly inverted, but Portugal’s had managed to de-invert itself in recent weeks.
But on Tuesday Portugal’s CDS curve has inverted — again.
Portugese bonds, meanwhile, are falling.
The yield on the 10-year is up 2 basis points, at about 4.64 per cent.
Related links:
Greece’s three-month bill yields may more than double on default concern – Bloomberg
Markets gear up for Greek debt restructuring – FT