Beautiful Greece

Yes, you’ve been hearing about Greek bond yields rising for some time now, but now it is far different — they’re rising, and they’ve gone vertical.

Above we show the spread between Greek bonds and German bonds. We show the spread, rather than just the plain Greek bond yields in order to remove any broader eurozone concerns. Thus this chart shows the additional yield the market is demanding to hold Greek rather than German bonds.

You can see how the spread has just exploded, rising faster than at any time. This shows a collapse of Greece’s perceived creditworthiness.

Note how the 2-year spread is now higher than the 10-year. That’s mainly because 2-year Greek bonds are yielding over 10% due to their market rout, and the ten year Greek bond is at about 8.8%. Extend this trend for even a short period of time and it’s all over for Greece’s finances.