Is April 24 the final decision day for Greece? Is it the Deadline for the GREEK Financial Crisis ?
There are signs of a great deal of stress lately in the Greek bond market. This can be seen in the increase in yields on Greek Government bonds.The 3 year bond is trading above 25% and the 10 year bond above 12%.
The catalyst for the tension in the Greek bond market is the fast approaching Eurogroup meeting that takes place on April 24.
The markets view this Eurogroup meeting as crucial. The Greek Government is running out of cash and needs an agreement on April 24 which its Eurozone partners.
Without an agreement no fresh funding will be made available to the Greek Government. Such a turn of events will only add to the talk of default and Grexit from the Eurozone.
For now the risk of contagion seems to be limited. The ECB’s QE programme and current up beat outlook for many Eurozone economies is protecting their bond markets from the Greek crisis.
The ECB and the Eurogroup for the time being do not show signs that they are worried about the risks of Greek contagion. However this is more to do with public and press consumption than reality.
Concerns still surround the Southern European nations of Italy, Spain and Portugal. If market worries do begin to spread across the Eurozone then the contagion risk will show up in the bond yields of these countries.
So will there be agreement on April 24? The clock is ticking down and movement towards a solution seems to be limited.
There may be behind the scenes and back channel discussions that we are not aware of. For the time being market participants need to focus on any news alerts between now and this coming Friday.