The bond vigilantes continue to circle the wagons in Greece. Bloomberg reports:
European stocks fell today, led by indexes in Greece, Spain and Portugal. Credit-default swaps on Greece rose 38 basis points to an all-time high of 970 basis points, according to CMA DataVision. Contracts on Portuguese government securities climbed 16 basis points to a two-week high of 336.5, while Spain rose 4 to 269.
To me, the spreads on sovereign debt are key leading indicators to watch. Widening spreads came ahead of the current turndown in stocks – just as they also tipped the market’s hand in 2007.
Record high spreads less than two months after Europe threw a trillion dollars at the Greece debt problem is quite impressive, showing that the market is totally not impressed by the lame attempts of government officials to stave off debt defaults. The rage of the bond vigilantes, and the Deflation Bird, is coming on strong!