Wednesday, June 22, 2011

Spanish Government Bonds In Focus

As the interest rate strategists at Commerzbank write today, despite hope for better sentiment in the weeks ahead:

At the same time, the risks of a re-widening in spreads from lower levels later this year have increased. Should politicians fail to come up with a coherent plan to ring-fence Greece in the case of default, highly adverse consequences like a bank run in Greece or Spanish yields moving to unsustainable levels cannot be ruled out.

Click on chart to enlarge, courtesy of Commerzbank.

Interestingly, but 10-year Spanish government bonds appear to be testing unchartered waters with a potential upside breakout from technical perspective, while still below the point of no return at 6%, as per Commerzbank. At the same time 5-year Spanish bonds still appear somewhat friendly...

However, this is one area to keep an eye on.

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