Signs the market is girding for a Greek default, in 4 charts

Monday, April 20, 2015
By Paul Martin

By Sara Sjolin
Apr 20, 2015

If the financial market is a good predictor, you’d better brace for a Greek default.

Borrowing costs on Greece’s government bonds have rallied back to levels not seen since 2012, the cost of insuring against a default has surged and investors are moving into safer assets in the eurozone, such as German bonds and equities.

These factors all indicate that capital markets are getting increasingly concerned the Greek government won’t reach a deal with its lenders in time to avoid a cash crunch. If the country runs out of money it could face a default and eventually be forced to leave the eurozone. Read: S&P cuts Greece credit rating, outlook is ‘negative’

“Overall the probability of a Greek exit is higher now than it ever was,” analysts at Barclays said in a note last week. “Even if a no-default ‘muddle-through’ remains our baseline forecast for now.”

The concern was echoed at Nomura, where economists said the “loss of trust in Athens among Greece’s eurozone partners has significantly raised the probability of […] a ‘Greccident’.”

The bank put a 40% probability of a Greek exit and “this is still rising with no clear sign of a reversal”.

The Rest…HERE

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