Rally of Greek bonds due to Italy and Eurobank Eurobank – Grivalia | Greek economy

Falling Italian bond yields, which boosted the investment climate for Euroregion badets, led to a significant rally in Greek bonds and the biggest drop in yields since September. According to badysts, the agreement between Eurobank and Grivalia has also had a positive effect on investors' psychology with regard to Greece, following strong pressure on Greek equities and bonds in recent times. . However, as they warn, the general climate around Greek badets remains fragile.

The news yesterday that the Italian government coalition will discuss the reduction of the budget deficit target has led to a significant improvement in the Italian bond and stock market, with a rise in bank shares of 5% to 6% and returns to 10 years in Italy bonds have a trough of 6.03% and 3.209%, the lowest since the end of September.

The mood of euphoria also quickly spread to Greek bonds, which, as evidenced by the Italian political crisis of May, were strongly influenced by developments in the neighboring country. Thus, Greek 10-year yields fell yesterday to 3.64% and 4.399% to the lowest levels since November 8, the improvement is significantly lower than that of Italian bonds. Greek bond yields fell from 2.80% to 3.364% and reached their lowest level since early November, while the 7-year yield was 3.99%.

Despite the improvement of the day before, badysts point out that the persistent volatility that has prevented Greece from remaining "stuck" by the markets should continue. Nicolas Wool, fund manager at Merian Global Investors, said Greek badets would continue to be under pressure despite the end of bailouts and high primary surpluses, not only because of the changing situation in Italy. The Greek bond market is shallow and vulnerable, the securities not participating in the ECB's buying program, so investors prefer to abstain. In addition, Greek bonds are in a "neutral zone" and do not attract emerging market investors or major investors in the euro area. In addition, euro area growth has slowed, reducing investors' expectations of Greece's growth, while the Greek banking sector remains a source of concern.