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| Euro and Greek bonds hit by bailout fears -- live updates | Euro and Greek bonds hit by bailout fears -- live updates |
| (35 minutes later) | |
| 9.49am BST09:49 | |
| Arnaud Masset, Market Analyst at online Swiss bank Swissquote also blamed Greece for the euro’s weakness today: | |
| In Europe, mounting uncertainty about Greece’s next payment to the IMF on June 5 adds pressure on the single currency as Alexis Tsipras, Greece’s PM, declared that his government would accept a sustainable deal “but not a humiliating” agreement, threatening to default on €1.6bn loan repayment due to the IMF in June. | |
| As a result, the fall of the euro against the dollar accelerates. | |
| 9.39am BST09:39 | |
| Kit Juckes, chief currency strategist at French bank Société Générale, sums up the situation this morning: | |
| The Greek government will need some form of deal in order to release further funds if it is to avoid missing payments to the IMF in June. Whether Greek PM Tsipras can negotiate a deal that is acceptable to enough MPs of his party isn’t clear and markets are once again, very edgy. | |
| Across the Mediterranean, there have been heavy losses by Spain’s ruling Popular Party to anti-austerity parties in regional and local elections. Peripheral European government bond spreads are wider though not drastically, but the euro is much weaker. | |
| And indeed, the euro is still bobbing below the $1.09 mark, a one-month low. | |
| 9.33am BST09:33 | |
| European stock markets are being buffeted by the Greek crisis, and the Spanish regional election results. | |
| The main indices are all in the red this morning, led by Madrid. | |
| Spanish bank shares are still down, after anti-austerity candidates recorded strong gains at the expense of the governing PP party. | |
| Updated at 9.35am BST | |
| 9.22am BST09:22 | 9.22am BST09:22 |
| Greece’s two-year bonds are now at their weakest level in a month: | Greece’s two-year bonds are now at their weakest level in a month: |
| Greek 2yr yields jump to almost 25% on more Greek noise. #ECB’s Hansson says agreement on #Greece ‘not in sight’ yet. pic.twitter.com/83UPNUBC3Q | Greek 2yr yields jump to almost 25% on more Greek noise. #ECB’s Hansson says agreement on #Greece ‘not in sight’ yet. pic.twitter.com/83UPNUBC3Q |
| (that’s Estonian central bank governor Ardo Hansson) | (that’s Estonian central bank governor Ardo Hansson) |
| 9.07am BST09:07 | 9.07am BST09:07 |
| Greek bond weaken after Varoufakis blames creditors | Greek bond weaken after Varoufakis blames creditors |
| Greek bonds are falling this morning, pushing yields (the rate of return on the debt) higher into the danger zone. | Greek bonds are falling this morning, pushing yields (the rate of return on the debt) higher into the danger zone. |
| Some in the City are blaming Greek finance minister Yanis Varoufakis, who yesterday pointed the finger at Greece’s creditors for the lack of progress. | Some in the City are blaming Greek finance minister Yanis Varoufakis, who yesterday pointed the finger at Greece’s creditors for the lack of progress. |
| In a new blog post, Varoufakis chided lenders for insisting on even deeper cuts, on top of the last five years: | In a new blog post, Varoufakis chided lenders for insisting on even deeper cuts, on top of the last five years: |
| The problem is simple: Greece’s creditors insist on even greater austerity for this year and beyond – an approach that would impede recovery, obstruct growth, worsen the debt-deflationary cycle, and, in the end, erode Greeks’ willingness and ability to see through the reform agenda that the country so desperately needs. | The problem is simple: Greece’s creditors insist on even greater austerity for this year and beyond – an approach that would impede recovery, obstruct growth, worsen the debt-deflationary cycle, and, in the end, erode Greeks’ willingness and ability to see through the reform agenda that the country so desperately needs. |
| Our government cannot – and will not – accept a cure that has proven itself over five long years to be worse than the disease. | Our government cannot – and will not – accept a cure that has proven itself over five long years to be worse than the disease. |
| He also produced this chart, showing how much damage has been caused to the Greek economy since its first austerity programme triggered a long recessionary, deflationary spiral. | He also produced this chart, showing how much damage has been caused to the Greek economy since its first austerity programme triggered a long recessionary, deflationary spiral. |
| Varoufakis’s conclusion is basically that it’s their fault not our fault: | Varoufakis’s conclusion is basically that it’s their fault not our fault: |
| Fair-minded observers of the four-month-long negotiations between Greece and its creditors cannot avoid a simple conclusion: The major sticking point, the only deal-breaker, is the creditors’ insistence on even more austerity, even at the expense of the reform agenda that our government is eager to pursue. | Fair-minded observers of the four-month-long negotiations between Greece and its creditors cannot avoid a simple conclusion: The major sticking point, the only deal-breaker, is the creditors’ insistence on even more austerity, even at the expense of the reform agenda that our government is eager to pursue. |
| More here: Austerity Is the Only Deal-Breaker | More here: Austerity Is the Only Deal-Breaker |
| In response, Greek two-year bond yields have jumped by 196 basis points, or almost 2%, to 24.94%, showing a high risk of default. | In response, Greek two-year bond yields have jumped by 196 basis points, or almost 2%, to 24.94%, showing a high risk of default. |
| Ten-year bonds are weakening too: | Ten-year bonds are weakening too: |
| Greece 10 years up 46bp this morning to 11.83% - the mkt hated Varoufakis's article and the big split in SYRIZA adding to concerns. | Greece 10 years up 46bp this morning to 11.83% - the mkt hated Varoufakis's article and the big split in SYRIZA adding to concerns. |
| 8.42am BST08:42 | 8.42am BST08:42 |
| Traders are also blaming Klaus Regling, the head of the European Stability Mechanism, for today’s euro selloff. | Traders are also blaming Klaus Regling, the head of the European Stability Mechanism, for today’s euro selloff. |
| Regling has told Germany’s Bild newspaper that Greece risks insolvency if it doesn’t reach a deal as a matter of urgency. | |
| He said: | He said: |
| “There is little time left... That’s why we’re working day and night for an agreement. | “There is little time left... That’s why we’re working day and night for an agreement. |
| Without an agreement with the creditors, Greece will not get any new loans. Then there’s a threat of insolvency. There are a lot of risks contained in that,” | Without an agreement with the creditors, Greece will not get any new loans. Then there’s a threat of insolvency. There are a lot of risks contained in that,” |
| Those “ominous comments” have sent a shiver through trading floors, says Ilya Spivak, currency strategist at DailyFX. | Those “ominous comments” have sent a shiver through trading floors, says Ilya Spivak, currency strategist at DailyFX. |
| Updated at 9.30am BST | |
| 8.36am BST08:36 | 8.36am BST08:36 |
| Newsflash from Madrid; Spanish bank shares are falling, as last weekend’s regional election results ripple through the markets. | Newsflash from Madrid; Spanish bank shares are falling, as last weekend’s regional election results ripple through the markets. |
| That mirrors the fall in Spanish bonds this morning. | That mirrors the fall in Spanish bonds this morning. |
| Analysts say that the success of the anti-austerity Podemos party have thrown prime minister Rajoy’s re-election strategy into doubt. | Analysts say that the success of the anti-austerity Podemos party have thrown prime minister Rajoy’s re-election strategy into doubt. |
| Reuters explains: | Reuters explains: |
| At a local level, the PP faces a new era of coalition and compromise for which it is ill-prepared. | At a local level, the PP faces a new era of coalition and compromise for which it is ill-prepared. |
| Rajoy - whose party must form pacts with some of the new groups if it is to retain power in a number of regions, including Madrid - has campaigned hard against them. Earlier this month he said they were “gangs” and a threat to Spain’s political and economic stability. | Rajoy - whose party must form pacts with some of the new groups if it is to retain power in a number of regions, including Madrid - has campaigned hard against them. Earlier this month he said they were “gangs” and a threat to Spain’s political and economic stability. |
| More here: Rajoy’s Spanish re-election plan in doubt after local battering | More here: Rajoy’s Spanish re-election plan in doubt after local battering |
| 8.30am BST08:30 | 8.30am BST08:30 |
| The euro is continuing to lose ground, and is now down 0.85 of a cent against the US dollar at $1.089. | The euro is continuing to lose ground, and is now down 0.85 of a cent against the US dollar at $1.089. |
| It’s not just about Greece, though. The dollar is romping ahead against most currencies this morning, on speculation that US interest rates will rise soon. | It’s not just about Greece, though. The dollar is romping ahead against most currencies this morning, on speculation that US interest rates will rise soon. |
| Federal Reserve chair Janet Yellen indicated last Friday that the Fed would act, if the US economy kept improving. | Federal Reserve chair Janet Yellen indicated last Friday that the Fed would act, if the US economy kept improving. |
| 8.21am BST08:21 | 8.21am BST08:21 |
| Spanish bond yields rise after election | Spanish bond yields rise after election |
| Spanish government debt is falling in value too, after anti-austerity activists secured a stunning victory in last weekend’s regional elections. | Spanish government debt is falling in value too, after anti-austerity activists secured a stunning victory in last weekend’s regional elections. |
| A backlash against Spain’s established parties saw an anti-poverty campaigner elected as mayor of Barcelona. In Madrid, left-leaning candidates came second, close behind the ruling PP party. | A backlash against Spain’s established parties saw an anti-poverty campaigner elected as mayor of Barcelona. In Madrid, left-leaning candidates came second, close behind the ruling PP party. |
| While the PP still came first in nine regions, it didn’t win a single majority -- meaning it could lose power if rivals form local alliances. | While the PP still came first in nine regions, it didn’t win a single majority -- meaning it could lose power if rivals form local alliances. |
| Related: Spain's indignados could rule Barcelona and Madrid after local election success | Related: Spain's indignados could rule Barcelona and Madrid after local election success |
| The results suggest Spain’s traditional two-party system is being blown apart, as citizens rebel against the policies that drove unemployment to record highs. | The results suggest Spain’s traditional two-party system is being blown apart, as citizens rebel against the policies that drove unemployment to record highs. |
| Spain will hold a general election later this year; the success of the anti-austerity Podemos and centre-right Ciudadanos parties suggest there might not be a clear winner. | Spain will hold a general election later this year; the success of the anti-austerity Podemos and centre-right Ciudadanos parties suggest there might not be a clear winner. |
| That has driven the yield, or interest rate, on Spanish 10-year bonds up by almost 9 basis points today to 1.862%, from 1.77% last night. | That has driven the yield, or interest rate, on Spanish 10-year bonds up by almost 9 basis points today to 1.862%, from 1.77% last night. |
| 7.58am BST07:58 | 7.58am BST07:58 |
| The euro is losing ground against almost every major currency today: | The euro is losing ground against almost every major currency today: |
| EURUSD 1.0909. pic.twitter.com/cOTbJ5PYCh | EURUSD 1.0909. pic.twitter.com/cOTbJ5PYCh |
| 7.57am BST07:57 | 7.57am BST07:57 |
| Euro hits one-month low | Euro hits one-month low |
| Fears over the Greek bailout have pushed the euro down to a one-month low this morning. | Fears over the Greek bailout have pushed the euro down to a one-month low this morning. |
| The single currency has fallen by over half a cent against the US dollar to $1.0909, its lowest point since late April. | The single currency has fallen by over half a cent against the US dollar to $1.0909, its lowest point since late April. |
| Traders are responding to warnings that Greece may fail to meet the €1.6bn it owes the International Monetary Fund in June. | Traders are responding to warnings that Greece may fail to meet the €1.6bn it owes the International Monetary Fund in June. |
| As Barclays warns this morning: | As Barclays warns this morning: |
| “The Greek political saga will remain in the spotlight as the deadline for payments to the IMF approaches”, | “The Greek political saga will remain in the spotlight as the deadline for payments to the IMF approaches”, |
| “A light data calendar and continued political uncertainty in Greece should continue to weigh on the euro.” | “A light data calendar and continued political uncertainty in Greece should continue to weigh on the euro.” |
| Over the weekend, two Greek ministers have warned that the IMF’s repayments are in doubt. | Over the weekend, two Greek ministers have warned that the IMF’s repayments are in doubt. |
| On Sunday, interior minister Nikos Voutsis declared that “This money will not be given and is not there to be given”, arguing that pensions and wages must come first. | On Sunday, interior minister Nikos Voutsis declared that “This money will not be given and is not there to be given”, arguing that pensions and wages must come first. |
| Related: Greece warns it is set to default on debt repayment loans | Related: Greece warns it is set to default on debt repayment loans |
| And energy minister Panagiotis Lafazanis also hit out at “austerity fanatics”, saying Greece will not be blackmailed. | And energy minister Panagiotis Lafazanis also hit out at “austerity fanatics”, saying Greece will not be blackmailed. |
| Lafazanis declared: | Lafazanis declared: |
| “It would not be a catastrophe to exit the euro, (nor) a terrorist act not to pay the next instalment to the IMF.” | “It would not be a catastrophe to exit the euro, (nor) a terrorist act not to pay the next instalment to the IMF.” |
| That sort of talk will certainly spook the City.... | That sort of talk will certainly spook the City.... |
| Updated at 8.00am BST | Updated at 8.00am BST |
| 7.46am BST07:46 | 7.46am BST07:46 |
| Introduction: Greece returns to talks with its creditors | Introduction: Greece returns to talks with its creditors |
| Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. | Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. |
| After a bank holiday break, Greece’s tortuous bailout negotiations return to centre stage today. | After a bank holiday break, Greece’s tortuous bailout negotiations return to centre stage today. |
| Greece’s officials will sit down with their creditors in Brussels, for another crack at closing the gaps between the two sides before the bailout extension expires in just five weeks time. | Greece’s officials will sit down with their creditors in Brussels, for another crack at closing the gaps between the two sides before the bailout extension expires in just five weeks time. |
| The talks are expected to focus on the now-familiar red lines – VAT rates, pension reform, labour deregulation and Greece’s primary surplus targets. | The talks are expected to focus on the now-familiar red lines – VAT rates, pension reform, labour deregulation and Greece’s primary surplus targets. |
| The steadfast lack of progress is fuelling concerns that Greece will fail to meet its looming debt repayments. Last night, prime minister Alexis Tsipras called an emergency cabinet meeting to discuss the crisis/ | The steadfast lack of progress is fuelling concerns that Greece will fail to meet its looming debt repayments. Last night, prime minister Alexis Tsipras called an emergency cabinet meeting to discuss the crisis/ |
| As Athens correspondent Helena Smith reports: | As Athens correspondent Helena Smith reports: |
| Amid mounting fears of financial collapse, Tsipras instructed officials to act speedily as his government sought to defuse tensions saying it would do its best to honour its debts – even if it failed to reveal how, exactly, it would find the money to pay €1.6bn in loans to the International Monetary Fund next month. | Amid mounting fears of financial collapse, Tsipras instructed officials to act speedily as his government sought to defuse tensions saying it would do its best to honour its debts – even if it failed to reveal how, exactly, it would find the money to pay €1.6bn in loans to the International Monetary Fund next month. |
| “We are very close to a deal,” the finance minister Yanis Varoufakis told reporters. “There are many different Germans, just as there are many different Greeks,” he said responding to reports that Berlin would not be prepared to retreat in what has become an all-out tug of war between the two governments. | “We are very close to a deal,” the finance minister Yanis Varoufakis told reporters. “There are many different Germans, just as there are many different Greeks,” he said responding to reports that Berlin would not be prepared to retreat in what has become an all-out tug of war between the two governments. |
| Related: Greek PM convenes emergency meeting of his bailout negotiation team | Related: Greek PM convenes emergency meeting of his bailout negotiation team |
| The ongoing crisis is expected to weigh on Europe’s stock markets; yesterday the Athens exchange fell by 3%. | The ongoing crisis is expected to weigh on Europe’s stock markets; yesterday the Athens exchange fell by 3%. |
| Our European opening calls: $FTSE 7037 up 5 $DAX 11782 down 33 $CAC 5101 down 16 $IBEX 11259 down 64 $MIB 23269 down 17 | Our European opening calls: $FTSE 7037 up 5 $DAX 11782 down 33 $CAC 5101 down 16 $IBEX 11259 down 64 $MIB 23269 down 17 |
| The agenda.... | The agenda.... |
| There’s no European economic data to look forward to, alas, but we do get four surveys from America: | There’s no European economic data to look forward to, alas, but we do get four surveys from America: |
| And in London, former UBS and Citigroup trader Tom Hayes will appear at Southwark crown court, accused of conspiring to rig the Libor benchmark interest rate. Hayes will be the first individual to face charges of alleged Libor rigging. | And in London, former UBS and Citigroup trader Tom Hayes will appear at Southwark crown court, accused of conspiring to rig the Libor benchmark interest rate. Hayes will be the first individual to face charges of alleged Libor rigging. |
| Related: First Libor defendant faces trial in London | Related: First Libor defendant faces trial in London |
| I’ll be tracking all the main events through the day... | I’ll be tracking all the main events through the day... |
| Updated at 8.15am BST | Updated at 8.15am BST |