EURUSD & Peripheral Bonds Tumble As Greek Fears Re-Emerge
The exuberant bounce of last week's IMF default/IMF payment workaround is fading fast as peripheral European bonds and the euro are being sold aggressively this morning, after headlines continue to suggest Greek bank collateral is dropping faster than the pressure in Patriot's footballs. Most notably, bunds are eeerily stable - almost as if some central planner figured out German bonds were the world's flashing red indicator and decided to suppress volatility some more.
As Green banks implode...
PIIGS are contagiously blowing out...
and The Euro is fading...
But bunds are deadstick...
As Bloomberg reports,
Greek banks are running short on the collateral they need to stay alive, a crisis that could help force Prime Minister Alexis Tsipras’s hand after weeks of brinkmanship with creditors.As deposits flee the financial system, lenders use collateral parked at the Greek central bank to tap more and more emergency liquidity every week. In a worst-case scenario, that lifeline will be maxed out within three weeks, pushing banks toward insolvency, some economists say.“The point where collateral is exhausted is likely to be near,” JPMorgan Chase Bank analysts Malcolm Barr and David Mackie wrote in a note to clients May 15. “Pressures on central government cash flow, pressures on the banking system, and the political timetable are all converging on late May-early June.”
Charts: Bloomberg
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