Greek bonds rallied as optimism spread that the European Union is close to agreeing on a bailout that will prevent a default. The package aid could be as high as 120 billion euros over a three year period from an original plan of 45 billion.
2-Year Greek bonds are in 312 basis points to a yield of 12.79 percent according to Bloomberg data. The yield on Greek 5-Year bonds is lower by 96 basis points to 10.46 percent while the 10-Year is yielding 9.06 percent, a decline of 91 basis points.
Greece Yield Curve 1-Day Change
Greek 5-Year Credit Default Swaps have tightened as investor concern subsided. Spreads, which is an indication of creditworthiness, has tightened in by 42 to 698 basis points.
Portugal and Spain is following suit on the news. 5-Year Portugal bond yields are lower by 56 basis points to 5.11 percent while Spain with a 5-Year maturity is yielding 3.13 percent, a decline of 14 basis points from the prior day.
Portugal 5-Year CDS decreased by 27 basis points to a spread of 307 while Spain’s CDS spread is at 177, a decline of 15 basis points. Ireland 5-Year CDS declined 13 to a spread of 203 basis points.
The Euro is up 0.2 percent to 1.3242. The Dollar Index is down to 82.012, a decline of 0.5 percent.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.