IMF Issues Warning About EU Bond Market

A top IMF official has warned that the rally in euro zone bond markets risks ending in disappointment, with investors now lending to governments at rates that assume the region’s return to full health will be glitch free.

Investor optimism on Europe has risen on signs the region’s recovery is gathering momentum after years of economic and financial crisis which left the single currency project close to collapse.

The optimism has triggered a fall in the price of borrowing for the region’s governments, including Greece, with Athens recently securing yields of less than 5 percent for a 3 billion euro ($4.16 billion) five-year bond issued last month.

José Viñals, the director of the IMF’s monetary and capital markets department, told the Financial Times the sale was “certainly very good news in terms of Greek authorities getting back into the market”. But he cautioned against a “fall into complacency” in Athens and elsewhere, advising officials across the bloc that it was “very important that policy delivers on all fronts”.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza