As governments absorb credit risks, sovereign yields should trade more closely to to corporate and agency debts, says bond king Bill Gross.
But in the next breath he contradicts himself. He says Germany and Canada are at the top of his lists for sovereigns while Greece and the UK are at the bottom.
But the same way that Credit risk is being socialized between governments and corporations, it is being socialized among governments…Using his logic, the spread between German and Greece should close, shouldn’t it?
The London weekend papers will sure run the Gross quote in banner headlines and cable will open offered on Monday in Asia. Doesn’t it always? It trades now at 1.5135 after a dip below 1.5000 shortly after the employment report.
