Market Watch
Greece is back in the news Friday. A deadlock over whether to shut down the state broadcaster is eliciting fresh fears that the government coalition could fall apart.
Those fears have helped push bond yields up dramatically. The Wall Street Journal reports:
“Greece’s junior coalition government partner will withdraw from the government’s cabinet, after a deadlock over the shutdown of the state broadcaster, a party member said Friday.”
Already beset by a sell off across emerging markets, Greek bonds continued to slide Thursday as the political machinations played out. An International Monetary Fund threat to stop its aid to Greece also hit bonds, The Journal reported:
“‘Greek bonds are under pressure on the back of concerns that the IMF is considering withholding aid unless the funding gap is closed,’ said Richard McGuire, senior fixed-income strategist at Rabobank International. ‘Unless that is closed, Greece will not able to fund itself beyond July. We’ve been here before, it’s the constant brinkmanship that’s a familiar refrain, but this time it seems a little more serious with the political backdrop.’”
Prices fell, pushing the yield on the 10-year Greek government bond up 53 basis points on the day to 11.066%, as of 10 a.m., according to Tradeweb.
Yields on Greek bonds had been falling earlier this year, hitting a three-year low as global bond yields dropped. But when global yields once again began rising in early May, Greek bonds followed suit. A downgrade to emerging markets status and closure of the state-run TV broadcaster earlier this month also helped push yields back up.
