Greek 2-year yields fall below 10-yr equivalents

Greek two-year bond yields fell below 10-year yields for the first time since December 2014 on Friday in a sign that investor fears that the country is headed toward default are easing.

The move came during a broad market rally spurred by signals from the European Central Bank that more monetary stimulus may be on the way.

While Greece’s bond curve remains abnormal in parts, the fall in two-year yields represents a significant step as Greece moves toward securing fresh bailout funds having been on the brink of exiting the euro area.

Shorter-term borrowing costs higher than their longer-term costs – a so-called “‘inversion” of a country’s government bond yield curve – is an indication that investors fear it may not be able to repay its debts.

Greek two-year bond yields fell 66 basis points to 7.57 percent on Friday, below 10-year equivalents of 7.64 percent but still above five-year equivalents of 7.30 percent.

[Reuters]