“Greece will soon be able to return to markets” estimates a new article in the Financial Times. The 10-year Greek bond yields fell to 7.8% yesterday, reaching the lowest point since the crisis outbreak in early 2010, after yesterday’s successful auction of 10-year Irish bonds.
Bond yields of Eurozone periphery countries also decreased significantly, states the FT, underlining the fact that the high demand for periphery debt reflects the increased intention of investors to buy government bonds with higher yields, as well as the increasing confidence in the creditworthiness of Eurozone economies.
This development significantly improved the chances of Portugal to follow Ireland’s example and exit from the bailout program during the year, so as Greece will be able to return to markets.
The bond yield reduction coincided with the increased expectations that the European Central Bank ( ECB ) will address deflation risk. Eurozone inflation fell to 0.8% in December, further below the ECB target which is “below but close to 2%.”