MARKETS

No worries from Greek bond sell-off

no-worries-from-greek-bond-sell-off

The eurozone bond sell-off, which has also affected Greece, may go on for some time, but there are many factors in place that can reverse it in the short term and harm investors who insist on being short, analysts note.

It would be a major surprise if the European Central Bank did not continue supporting Greek bonds, they say, considering there is a series of catalysts that by the end of the year should lead to a significant reduction in spreads.

Pressure in the bonds market eased slightly on Monday, but the Greek 10-year yield remained near the 18-month high of 1.30%.

In a new report, Societe Generale argued that the ECB is expected to once again constitute a strong weapon for the Greek economy that will maintain the positive momentum it has generated.

For its part HSBC notes that although the bond sell-off still has some way to go, the atmosphere may well change suddenly, so going short especially on the euro periphery debt may not be such a wise strategy at the moment.

It added that the ECB may not be as good as it used to be in communication terms, but it retains a supportive if dovish rhetoric and could intervene decisively.