Chart of the Day: PIIGS yield update

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Time for an update on PIIGS (Portugal, Ireland, Italy, Greece and Spain) cost of raising debt. Remember, the Eurozone member states must fund their government deficit spending by selling bonds in the private debt markets. The Euro is effectively a “gold” standard currency, unlike the fiat currencies of other developed countries.

The 10 year bond yield is the benchmark, here’s the chart courtesy of Scott Barber at Reuters:

A few things to note. First, German bonds (called bunds) are yielding less than 2% – slightly below the above yields! Secondly, notice that the re-organised Greek debt is already at a 20% yield – some resolution. Irish yields are falling (hence bond prices are rising, this is an inverse relationship), whilst Spanish debt is starting to tick up from the 5% mark and Portugese debt is on the same path as Greece.

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Courtesy of MoreLiver is the upcoming auctions of European debt:

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