After all these months attempting to put a damper on the crisis, the focus of your attention this morning, on this first day after summer is… the European crisis.
We’ve already detailed the raft of of bad news (new stress-test doubts, the Greek cabinet reshuffle, the flailing Irish banking rescue) from the region this morning, and not surprisingly, spreads are blowing out.
The Greek-German 10-year yield spread reached 942 basis points and was at 939 basis points as of 10:51 a.m. in London, from 914 basis points yesterday. The German-Irish 10-year spread climbed to 368 basis points, the highest since Bloomberg started compiling the data, from 343 basis points. The Portuguese-German spread was at 349 basis points from 333 basis points.
Meanwhile, according to ForexLive, there are rumours of fresh ECB intervention in the bond market this morning, as the central bank may be scooping up PIIGS debt.