ECONOMY

German benchmark Bunds…

News last week that Greece’s economy shrank by more than expected in the second quarter of the year, at 3.5 percent, is making fixed-income investors more nervous. This is reflected in the premium investors’ demand to hold 10-year Irish and Greek government bonds over German benchmark Bunds, which rose yesterday, while the cost of insuring their debt against default also increased. The 10-year bond yield spread widened to 834 basis points (bps), its highest since May 10. Five-year credit default swaps on Greek government debt rose 20 bps to 810 bps.

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