Wilder on ‘The euro area bond crisis in charts’
by Rebecca Wilder
Edward Harrison draws our attention to the euro area bond crisis: Spain, Italy, Belgium yields now under attack. I’d like to add to this thread by offering some illustrations of the polarizing of bond markets that’s coincident with the euro area bond crisis. (Notice I do not say currency crisis because it’s really the bond markets that are seething – the euro area, hence the currency, is thought to be relatively secure for now.)
(click to enlarge)
Spain, Italy, and Belgium are breaking away from the ‘core’, Germany, Austria, Netherlands, Finland, and France. But if you look really hard, France is showing a fair bit of stress too; it’s underperforming the other core countries.
This is ironic. By attempting to stem broader contagion by ring-fencing Greece, Ireland, and Italy, euro area policy makers focused market attention on those countries too big to quickly ring-fence, i.e., Italy and Spain.
(The complete post is at Newsneconomics)
France is growing far slower than Germany. France lots of obligations down the road that will need the sort of revenues that faster growth provides to make them managable. Any pessimist worth the name has been worried about France since the whole “growth through austerity” craze got going.
Did you notice what the Swiss central bank did today?
Yes! That was a surprise! USD sold off over 2% against swissie – now the pair is essentially back to unchanged. As long as there is stress in the euro area, the swiss franc will bbe strong (and rate cutting makes no difference, really).
Have you read the IMF Article IV review of France released on July 27?
I don’t recall if you have written any posts about the IMF positions on European nations in relation to the EU 2013 deficit targets. It sounds like you’re opposed to the IMF recommendations, perhaps across the board.
Are you opposed to the IMF recommendations?
Looks like a technical breakout with Spain leading. Not good.