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Morgan Stanley: Sovereign debt crisis not over

By   || August 25, 2010 at 15:57 GMT
|| 2 comments || Add comment

Default is a matter of when, not if, the US investment bank says.

Greek spreads closed at 950 basis points over 10-year German bunds today, a sign of ongoing repayment jitters…

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2 Responses to “Morgan Stanley: Sovereign debt crisis not over”

  1. Joshua on August 25th, 2010 17:25 GMT

    Hi Jamie,

    Regarding the bund – would sovereign issues in the Euro-zone cause the bund to rally or fall from here do you think?

    It’s a bit of a paradox. Bad news, which should therefore make the bund less attractive, causes risk aversion, and hence everyone buys bonds, and thus the bunds…..

    If we did see a default, would it send the bund dumping?

    Thanks.

  2. Jamie Coleman on August 25th, 2010 17:42 GMT

    No, it has been one-way traffic for the bund…all risk aversion. If Greece defaulted, for example the bund yield would get even more extreme at first but then we may get back to more “normal levels” down the road if growth picked up after the default as austerity eased, etc…Only if Germany got into a debt crunch would the bund get whacked, and I don’t see that at this stage…

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