With this last debt agreement and bailout for Greece, events have settled down in Europe for the time being. Equity markets around the world have resumed their upward trajectory. Commodities have leveled off for the most part with the two most important commodity futures (arguably), WTI and Brent, hovering around the 105 and 125 levels respectively. Bond yields are starting to tick up which is probably starting to draw the attention of central bankers and investors but they still remain at historically low levels. Sovereign CDS prices have for the most part dropped off, however there is one country where they are starting to climb back up again: Spain.
Spain's 5 Year CDS price gained 3.4% in Tuesday's session which isn't a crazy amount but it does bring it that much closer to the swing high achieved back in November. Many were expecting the bond bears to focus their attention on Portugal next but perhaps we are seeing the inital signs of a redirection towards Spain instead. Portuguese 5 Year CDS having risen in march as well, but as the following chart will demonstrate, they diverged from Spain's around the 15th and started to drop:
On a somewhat related note, we wanted to point out that the combined 5 Year PIIGS CDS appear to have been re-calibrated after the ISDA's credit event ruling on Greece. We haven't been able to find an actual announcement but based off of the dramatic drop (as seen in the chart below), we're guessing that Greece has been removed from the group.
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