The Greek Haircut
Market Commentary Highlights...
- Despite all the headlines, yields for Italy, Spain, Portugal and Ireland's sovereign debt
are at or below where they were in mid- July when the second rescue package for Greece was drafted.
- While the second Greek rescue stemmed the decline in the sovereign bond market, as intended, stocks have plunged since then as investors increasingly priced in a greater "haircut" the banks may have to take on their Greek bond holdings.
- The stock market's rise, despite no resolution on the terms of the comprehensive rescue package, appears tied in part to the increased clarity around limiting the amount of the haircut, lowering the odds of further bank failures and a 2008-style financial crisis.
View the entire economic Commentary
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