Wednesday, April 28, 2010

Up, Up and Away!

Yield on Greece's Ten-Year Bonds

If you are Greek, you do not want to be borrowing money right now, because interest rates are going through the roof. The chart above is actually a few hours out of date. The yield on ten-year bonds issued by the government of Greece reached 9.68 percent yesterday, but that was before Standard & Poor's downgraded Greek debt to BB+, or junk status. Overnight the yield on the ten-year shot up to over 11 percent, more than 800 basis points above the benchmark German bund.

There are no meaningful prices available for Greece's two- and five-year notes, a huge red flag signaling that default is imminent. Portugal may be next, with Spain to follow. The dominoes left standing when this is all done? Your guess is as good as mine.

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