The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

Outside of the late ’08, early ’09 panic into US Treasuries where the 10 yr yield got to 2.06%, the 10 yr bond yield is now at the lowest level since at least 1962 (as far back as Bloomberg goes) at 3.07%, breaking the June ’03 level of 3.11% less than 2 weeks before Greenspan cut the fed funds rate to 1%. Greek 5 yr CDS has risen to a record high of 965 bps, surpassing the previous high close of 940 bps back in May. While their 2 yr note is trading higher today (Euro backstop lasts 3 yrs), 5 yr and 10 yr bonds are lower, in part to forced end of Q selling but the action in 5 yr CDS is sending a clear message of expectations of inevitable debt restructuring at some point. In European money markets, stress continues to grow as the 3 mo Euribor spread to 3 mo EU LIBOR is at a fresh record high. Likely in response to China’s move on the Yuan and with a strong economy, Taiwan unexpectedly raised interest rates by an 1/8 pt to 1.375%.