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  • Greek CDS blow-out

    Alexander Gloy

    On Wednesday Greek CDS (Credit Default Swaps) blew out to a new record of 1,118 bps (+184): Source: CMA This implies a 68% likelihood of default, topping even Venezuela (59%) and Argentina (49%). With interest rates above 10% it is mathematically impossible for Greece to repay EUR 450bn of debt (or 150% of GDP). I…

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  • Red flag alert: Greek 10yr government bond yield surpasses 10%

    Alexander Gloy

    Greek 10yr government bond yields today reached 10.37% (+0.60) as credit default swaps (cost of insuring against bankruptcy of the Greek government) rose 85bps to 940. Even 2yr bonds yield 9.78% (+0.57) – a time period presumably covered by the European bail-out package. Spain (10yr 4.52% +0.07), Italy (4.04% +0.07) and Portugal traded wider compared…

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  • Swiss Franc exchange rate controls – 1971/2 deja vu?

    Alexander Gloy

    After having spent half of Swiss GDP on intervening (unsuccessfully, see chart) in the foreign exchange markets the SNB (Swiss National Bank) is at the end of its wit. Source: Forexhelp.com If you’d like to know what’s next in store you only have to go back 40 years: April 30, 1971 – Rich Germans have…

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  • GLD now the world’s second largest ETF

    Alexander Gloy

    GLD is now the world’s second largest ETF (exchange traded fund) with 1,308 tonnes of gold worth $51bn (SPY is the biggest one with $83bn). Governments finally realize that too much debt leads to default. Now they try to tighten the fiscal belt. All that it left to avoid financial disaster is “quantitative easing” (=…

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  • How the Swiss National Bank tried to keep the CHF from appreciating – and failed

    Alexander Gloy

    According to preliminary data foreign currency reserves at the Swiss National Bank (SNB) in May went up to CHF 232bn from 153bn in April. Meaning they intervened with 4bn per work day in May, up from 1bn previously. And now they wasted half of GDP on potentially worthless currencies (Euros, Dollars). Why does the SNB…

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