Photo: Esther Gibbons on Flickr
We’ve seen a miraculous rally in equities across the board the last few days, but that optimism might be coming to an end this morning.European shares have fallen sharply in early trading, and the headlines are once again centering around Greece.
The DAX is down 0.36%, and the CAC 40 is off 0.43%.
Even though it looks like the Greek government and private Greek bondholders will push through some kind of deal on restructuring debt holdings, Greece’s financial situation remains grim, and no one’s convinced that any debt swap deal will actually do anything to make the country’s debt sustainable long-term.
A wary reversal in the last hour, however, suggest that this cynicism could still turn around.
All this after a stunning rally in Asia, despite a depressing China flash PMI number.
UPDATE: One of the most ominous numbers out of Europe today comes from Spain, after worries that the autonomous region of Valencia is on the brink of default.
That’s showing up in yields on Spanish bonds. Yields on 2-year notes have ticked up more than 30 basis points today, after hitting lows earlier this month: