The continued uncertainty of how a Greece bailout will be structured and whether it will be enough has led to another day of sharp selling in PIIGS debt. The Greek bond market has debt restructuring written all over it as the 2 yr note yield is skyrocketing by 250 bps today to 12.80%. The 10 yr is up another 60 bps to 9.25%. Portugal’s 10 yr yield is spiking to the highest level since ’02 and Spain, Italy and Ireland 10 yr yields are at 2 month highs. Portugal CDS in particular over the past week is now wider than Vietnam and Bulgaria. The rest of Europe and US markets continue to shrug off the rising cost of money for 35% of Euro Zone GDP. Markets also are immune to the 11 week low in the Shanghai index in response to the rising prospect of a property tax being put on the homes of non 1st time buyers. Good earnings, better economic data and the greatest monetary easing in the history of the world by the Fed has certainly helped.
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