We’ve seen modestly wider spreads today between the German benchmark (should we now be looking at French OATs?) and the debt of Greece, Spain and Portugal. Too early to panic, but it is worth keeping in mind.
With the central banks in the market buying bonds we will not see meltdowns in lower-quality sovereign debt like we’ve seen in recent months (like 20% 2-year rates in Greece), but we should be able to gauge the market’s relative comfort. It is growing less comfortable as the euro slides. it should come as no surprise.
