If this chart of exports is anything to go by, it’s hard to see how the US would become unwell:
Markets are saying pretty much what I’m saying too: that Greece is doing what it can, but that Greece is not going to be able to carry the weight of all of Europe and the other problems that Europe has…
George Papandreou, from Bloomberg. ‘Sorry, but we just can’t bail out Germany…’ Although note how often the periphery is seceding (to borrow a phrase) from the troubles of the (Italian and Spanish) core these days? Read more
Deutsche Bank’s fixed income research team don’t see any need to beat around the bush.
We’re in the early stages of the Global Sovereign Crisis. End of. Read more
Fears of contagion from political and market turmoil in Greece sent Spanish borrowing costs to 11-year highs, in spite of a deal between the European Union and the International Monetary Fund that reduced the chance of an imminent default in Athens. Spanish government bond yields, which move inversely to prices, jumped to highs last seen in September 2000, while Greek yields surged to fresh euro-era highs on Thursday, the FT reports. Investors scrambled into the havens of US and German government bonds with yields on Treasuries and Bunds dropping to seven-month lows. The threat of a Greek default within weeks receded as international leaders overcame a hurdle to ensure Athens received bail-out loans to repay maturing debt in July. A failure to repay this debt would trigger a default. Read more
No, this isn’t a festering collection of mutant organisms…
From Moody’s on Thursday afternoon, its report on public finance rating revisions in 2010:
Rating activity in 2010 provides further evidence that the municipal market faces credit pressure not seen since the Great Depression. Read more
Spot the odd one out in Friday’s early price action.
Respected economist Paul de Grauwe, of Leuven University, has a big warning for the eurozone — on the back of the Irish and Greek sovereign crises.
According to him, it was the idea of a sovereign debt restructuring mechanism (or burdensharing for investors) proposed on October 18, that triggered the latest spree of speculative bond attacks on weak eurozone members. Read more
All eyes were on Spanish bond yields AGAIN on Wednesday. Especially as news emerged that the country was freezing, due to market volatility, the start of its €13.5bn issue programme set to sell state-guaranteed power revenue bonds.
But as BNP Paribas points out in an earlier note in the day, investors who are paying close attention here should probably be equally mindful of LATAM spreads. Read more
Notes from the search for exposure to Spanish bonds, this.
Timely, as 10-year issues are trading at a record spread (233bps at pixel time) to bunds, according to Bloomberg data. Read more
There have been some frank denials of possible European contagion effects from the Irish fallout this week.
Among those suggesting as much have been (via Reuters): Read more
Irish bondholders look safe for now — in the wake of the €80-90bn Irish bailout announced over the weekend. But it might end up being a rather short reprieve.
From David Mackie at JP Morgan: Read more
That’s the Nasdaq on Thursday, responding to the eurozone implosion. Plus chart:
Here’s a eurozone-focused — but very eloquent — description of the sovereign contagion problem.
From Independent Strategy: Read more
A disappointing week for bullish investors got worse today as it became clear that the credit market was in the midst of its most severe correction since the early months of 2009. The positive feedback loop between states and their banking sectors has re-emerged, and is having a seismic impact on the broader market. Read more
Ahead of a much-watched Spanish bond auction plus a key European Central Bank meeting on Thursday, here’s a sign that the Greek contagion effect has penetrated even the furthest corners of European debt markets.
As Barclays Capital’s AAA Investor note explained on Thursday, covered bonds are coming under increasing pressure thanks to Greek fear, plus Portuguese and Spanish sovereign risk: Read more
With markets across Europe reeling on Tuesday, will the European Central Bank have to press the nuclear option button and start buying government bonds?
Gary Jenkins of Evolution Securities is one of an increasing number of analysts who think it might be the only way to stop the contagion spreading. Read more
Equity markets in Spain and Portugal tumbled on Tuesday, undermining hopes — and politicians’ assertions — that the €110bn Greek rescue package would quell fears of eurozone contagion.
David Shairp, global strategist at JP Morgan Asset Management, attributed some of the negative reaction to the details in the aid package (and the hangover from rating agency Standard & Poor’s decision to downgrade both Spain and Portugal). Read more