Greek Bonds Signal Default
Over the past few weeks, government officials around the European Union have been trying to be positive, telling news sources a Greek deal is soon to come. Well, week after week the market has been pricing in this supposed deal and now looks to be back at levels in which it hasn't seen since the crash of 2008.
If you are one of those bullish investors who believe Germany and China will come in and save the day, you should be busy buying 1-year Greece Government Bonds - right?
Well the market sees it different. With 1-year Greece Government Bonds trading up over 8.77 percent today they are yielding an astonishing 600 percent - a sure sign that a default is coming. In fact, Moody's and S&P could weigh in on a Greek default as soon as today.
Unlike many bullish investors out there, others do not anticipate China will step in and lend a helping hand; face it the country isn't really known for its good deeds. Germany has recently been struck with its own blow as its President, Christian Wulff, has resigned following threats of a legal probe into corruption allegations. It has become evident that the recent resignation has not helped in the speedy process of a deal as it caused Chancellor Angela Merkel to cancel a meeting today in Rome. Merkel noted she still expects the deal will be finalized on February 20th despite the recent resignation. If something is done, it will likely come with harsh terms.
With the one year bond offering investors such a great return, anyone who is investing in stocks at this time would have to be crazy; or maybe you would have to be crazy to think this isn't a true sign of a default is on its ways.
Click here for a chart of the 1 year Greece government bond.
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If you are one of those bullish investors who believe Germany and China will come in and save the day, you should be busy buying 1-year Greece Government Bonds - right?
Well the market sees it different. With 1-year Greece Government Bonds trading up over 8.77 percent today they are yielding an astonishing 600 percent - a sure sign that a default is coming. In fact, Moody's and S&P could weigh in on a Greek default as soon as today.
Unlike many bullish investors out there, others do not anticipate China will step in and lend a helping hand; face it the country isn't really known for its good deeds. Germany has recently been struck with its own blow as its President, Christian Wulff, has resigned following threats of a legal probe into corruption allegations. It has become evident that the recent resignation has not helped in the speedy process of a deal as it caused Chancellor Angela Merkel to cancel a meeting today in Rome. Merkel noted she still expects the deal will be finalized on February 20th despite the recent resignation. If something is done, it will likely come with harsh terms.
With the one year bond offering investors such a great return, anyone who is investing in stocks at this time would have to be crazy; or maybe you would have to be crazy to think this isn't a true sign of a default is on its ways.
Click here for a chart of the 1 year Greece government bond.
Get immediate access to market moving news and alerts with StreetInsider.com Premium - FREE TRIAL!
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