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With Greece still a top story from the Manic Media, we thought it worth posting the charts below that indicate the “big moves” associated with a scenario in which Greece defaults on its sovereign debt are behind us, for now.

Note that we’re not ruling out default over the intermediate term TREND (3 months or more); not only is history on our side for this call, but it’s fair to say that while fears have waned marginally on the inability of the Greek government to repay its obligations (see CDS and 10-yr bond yield charts), Greek officials have failed to convince the European community and investors at large that it will systematically draw down its spending and shave away its budget and public deficits. 

Yet cutting spending could be easier said than done.  Don’t forget that calls for government spending cuts have brought people to the streets and that a massive demonstration [riot] is scheduled for tomorrow, with public and private sector unions representing half of Greece’s five million workforce expected to walk off the job for 24 hours in protest.

Our next catalyst is a possible Greek 10-year bond issuance of 3-5 Billion EUR that could take place as soon as later this week. The demand for the bond could say a lot about the future direction for Greece.

Matthew Hedrick


Duration Mismatch: Greece - G1

Duration Mismatch: Greece - G2

Duration Mismatch: Greece - G3