The unfailingly brilliant - despite the disappearance of its founder - Macro Man made the point last July that the cheapest way to play eurozone sovereign risk was through the FX markets, popping up this Bloomberg chart of the Spain 10-year/bund spread and EUR/USD to prove the point. This is no longer the case.Recent yield increases in Portuguese, Irish and Greek debt finally started to spill over onto the Spanish version last week. Accompanied by a remarkable degree of press silence (how does one link to a non-existent item?)*, the 10-year is currently dishing out 4.30 percent-plus and the spread to the German item has widened from 160 to 190 bps in short order. The euro, meantime, today is managing a 10-month high against the buck.
*We'd be prone to concluding that the main information to be found in any one medium would mostly consist of what the rest of their cohorts presently consider to be such. This is the same relationship that gossip has to fact.
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