Those watching the stock market ramp yesterday might be wondering if something meaningful had happened. Nothing did. The EU agreed to give Greece more money, but everyone knew they would anyway.
Let’s take a look at sovereign bond spreads to see what they think about the non-news.
10-Year Debt Greece – Yield 16.8%
10-Year Debt Spain – Yield 5.6%
10-Year Debt Ireland – Yield 11.89%
10-Year Debt Portugal – Yield 11.37%
10-Year Debt Italy – Yield 4.94%
In case of differences between charts and listed values, go with listed values. Bloomberg interactive charts are delayed. Listed values are as of 6:40 AM Central 2011-06-24.
The stock market reacted as if there was news, the bond market put out the big yawn. Greek yields came down slightly, but that is simply reflective of the can-kicking exercise.
Spanish yields essentially did nothing, while Irish and Portuguese yields hit new highs.
Spain and Italy are poised to smack Trichet, the ECB, EU, and the IMF the smack across the face and it’s just a matter of time before they do. Meanwhile the action in Irish and Portuguese bonds shows the immense stress did not go away.
Mike “Mish” Shedlock
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