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Greece Sees Positive News on Bonds, Deficit


The optimistic outlook about the future of Greece’s economy after S&P’s upgrade on Friday continues with good news on two fronts: Greek short-dated bond yields and the country’s account deficit.
Short-dated government bond yields fell on Monday following a decision by S&P Global Ratings to upgrade Greece for the first time in two years. The country’s credit upgrade boosted sentiment towards the bond market.
An all-around expectation that Greece will complete its third review without the usual hiccups and that a smooth exit from its programmer in August will become a reality has been beneficial for the country in the bond market.
Short-dated Greek government bond yields were down six basis points at 1.32 percent. Five-year Greek bond yields were down about three bps at 2.81 percent, while longer-dated bond yields were slightly higher on the day.
At the same time, Monday’s announcement by the Bank of Greece that the country’s current-account gap narrowed notably in November from a year ago was another positive development.
The current account deficit fell to €954 million ($1.1 billion) in November from €1.25 billion in the corresponding month last year. The deficit on goods trade declined to €1.35 billion from €1.64 billion last year. Also, the surplus on services trade rose to €480.8 million from €466.4 million.
The only negative data marks are in government-employed wages, which rose 1 percent (from 25.8 percent in 2016 to 26.8 percent of state expenditure) and social benefits (from 45.3 percent in November 2016 to 45.7 percent last November).

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