Read his dispatch here.
09.26
What's going on in the bond market?
John Ficenec writes:
Greek bond yields have soared this morning to more than 16pc - bond yields move in the opposite direction to bond prices, so as the price falls the yield, or rate of interest goes higher.
The Greek 10-year government bond is the benchmark rate for the cost of borrowing on the international credit markets. As banks have become more concerned about Greece’s ability to pay back its debts the cost of borrowing has soared from under 10pc in January. The price of Greek bonds has also tumbled
As the bond yield rises it gets more expensive for a country such as Greece to pay the interest to its creditors on the international money markets.
In bond markets a rule of thumb is that when the yield, or interest rate, rises above 7pc it passes the point of no return and it becomes almost impossible for a country to pay its interest and its pay its finances such as pensions and wages.