Thursday, June 11, 2015

11/6/15: What Markets Are Pricing in Greece-Troika ex-IMF Standoff

Head on collision warning 1: IMF has now left the 'political dialogue' room where Greece and Troika (pardon, Institutions) have been pretending to negotiate a pretence at a solution:

Which brings us to the markets.

CDS-implied probability of default for Greece is now at 82.04%, ahead of Ukraine:
But bond markets seem relatively cool:
Which suggests two things:

  1. Markets still anticipate a deal; but
  2. Markets also push down expected duration / longevity of the deal and, in case of the deal unraveling, they expect lower recovery rates.
This, amidst continued 'warnings' and 'dire warnings' and 'ultimatums' and 'take-it-or-leave' offers and the rest of warring rhetoric is not a good omen for the crisis resolution.

Even Jean-Claude 'The Rubber Chicken of European Politics' Junker seemed to have given his last push to this: and failed...

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