Greek Debt Rally Loses Steam as Fears Return

A powerful rally in Greek government bonds, which has seen prices surge four-fold since June, is running out of steam with investors still nervous the bailed-out country could be at risk of leaving the euro zone.

Expectations – confirmed last week – that Greece would secure further bailout funds and bets further losses will not be imposed on private Greek bond holders have cut the return investors demand to hold 10-year Greek bonds by two thirds from record levels of 30 percent before elections last June.

Fears Greece could leave the euro peaked before the election when, with voters enraged at mainstream parties that had imposed harsh spending cuts, investors thought anti-bailout politicians might come to power.

Those worries have since eased but, for the rally to go much further, investors would effectively be pricing out any exit risk, analysts said. This is seen as premature.

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