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Risks of imminent Greek default increase – KBC

FXStreet (Barcelona) - The KBC Bank Research Team notes that both Greece related headlines and the bond markets suggest markets are preparing for a Greek default risk.

Key Quotes

“Greece grabbed most headlines today. Overnight, the news flow was negative with an S&P rate cut and a warning by German FM Schaeuble that a deal at next week’s Eurogroup meeting was highly unlikely.”

“During the day, rumours that Greece informally approached the IMF for a rescheduling/postponement of this year’s pay dates, added to worries. IMF officials also ruled out the option.”

“On markets, Greek bonds clearly underperformed with the Greek yield curve further inverting. The 3-yr yield is more than 2% higher (27%) while the 10-yr yield increased by more than 0.5% (12.7%). Both the news flow and markets indicate that chances of an imminent default increased.”

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