A Call from the Mountains

I interrupt my vacation to bring you an update on the markets. Although I am not in my battle chair the view from my mountain is quite clear.



The yield of the 10-year U.S. treasury has been rising all this week and was 3.12% at my last observation today. Some have been pointing to the end of QE2 and the lack of Fed buying of U.S. treasuries for higher long-term interest rates. Bear scat! The reason for the selloff of U.S. treasuries is the approval of austerity measures by the Greek Parliament and the reduced probabilities of default and contagion.



Speaking of Greece (and bear scat), German banks have agreed to voluntarily exchange their Greek debt with maturities out to 2014 for longer dated Greek debt. It is not yet clear if the ratings agencies will consider it a default. If it walks like a duck and quacks like a duck... you get the picture.



Well that it is all for now. Jusqu’a semaine