Blog Post

(Lack of a) reaction in euro area yields

With the current situation in the ongoing Greek debt negotiations taking a turn for the worse this weekend, we take a look at other Euro area interest rates on long-term debt  to gauge how markets have reacted to the news of a Greek referendum on the Eurogroup's proposals,  and the imposition of capital controls.

By: Date: June 28, 2015 Topic: Macroeconomic policy

With the current situation in the ongoing Greek debt negotiations taking a turn for the worse this weekend, we take a look at other Euro area interest rates on long-term debt  to gauge how markets have reacted to the news of a Greek referendum on the Eurogroup’s proposals,  and the imposition of capital controls.

So far, markets have reacted in a fairly benign way, especially when put in the context of developments between 2010 and 2012.

Figure 1: Intra-day Evolution of 10 Year Sovereign Yields (%, hourly data)

Source: Thomson Reuters Eikon, most recent data 17:00 CET (16:00 GMT)

Figure 2: Change since Market Closing on Friday, 26.06.15 (basis points)

Source: Thomson Reuters Eikon, most recent data 17:00 CET (16:00 GMT)

Spain, Italy and Portugal show the biggest market reactions to the weekend’s news, with yields temporarily increasing by 22, 23 and 28 basis points respectively, from the last data on Friday to the point at which markets opened today. The markets have dampened their reaction since then somewhat (as shown by the red bars) in Spain and Italy.

Figure 3: Historical perspective of 10 year sovereign yields (%)

Source: Thomson Reuters Datastream

Taking a broader look at volatility, the VIX and VSTOXX indicies do not show significant signs of major stress yet, although the VSTOXX, the European index, has diverged locally from the VIX recently, but this evolution has been ongoing since before the weekend’s events.

Figure 4: VIX volatility index

Source: Thomson Reuters EIKON


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint. Anyone is free to republish and/or quote this post without prior consent. Please provide a full reference, clearly stating Bruegel and the relevant author as the source, and include a prominent hyperlink to the original post.

Read article More by this author
 

Blog Post

Owning up to sustainability risks: the EU should champion international standards

To keep European Union capital markets open and integrated, new international standards should be reflected in future European law and accounting practice to provide further incentives for a reallocation of capital, reflecting in particular climate risks.

By: Alexander Lehmann Topic: Banking and capital markets, Green economy Date: April 26, 2022
Read article More on this topic More by this author
 

Opinion

China’s Covid policy to be year’s largest economic shock

Beijing’s ‘dynamic zero-Covid’ policy could devastate the domestic economy, but the effects will also be felt globally.

By: Alicia García-Herrero Topic: Global economy and trade Date: April 26, 2022
Read article More on this topic
 

Blog Post

Venture capital: a new breath of life for European entrepreneurship?

Whether the dynamism of European venture capital of the past two years can be sustained and kick start a credible alternative to bank finance in the European Union remains to be seen.

By: Maria Demertzis and Lionel Guetta-Jeanrenaud Topic: Banking and capital markets Date: February 10, 2022
Read article More on this topic More by this author
 

Blog Post

Better sustainability data is still needed to accelerate the low-carbon transition in capital markets

Investors need more trustworthy sustainability data. Regulators should leave space for better products to emerge, while remaining alert to well-known patterns of misconduct in capital markets.

By: Alexander Lehmann Topic: Banking and capital markets Date: October 18, 2021
Read article Download PDF More on this topic
 

Policy Contribution

Europe should not neglect its capital markets union

The European Union’s capital markets remain very underdeveloped compared to the United States. The market for equity, as measured as the size of the total market capitalisation of listed domestic firms relative to GDP, is much larger in the US and in Japan than in Europe.

By: Maria Demertzis, Marta Domínguez-Jiménez and Lionel Guetta-Jeanrenaud Topic: Banking and capital markets Date: June 7, 2021
Read article More on this topic More by this author
 

Blog Post

Confronting the risks: corporate debt in the wake of the pandemic

As European economies emerge from lockdowns, it is becoming clearer that corporate debt has reached critical levels. A new French scheme, in which the state guarantees portfolios of subordinated debt, shows how financial support could be targeted better.

By: Alexander Lehmann Topic: Banking and capital markets Date: April 28, 2021
Read about event More on this topic
 

Past Event

Past Event

Completing the banking union in the age of Next Generation EU

Invitation only event to discuss the banking union.

Speakers: Tuomas Saarenheimo and Nicolas Véron Topic: Banking and capital markets Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: October 27, 2020
Read about event More on this topic
 

Past Event

Past Event

Next Generation EU debt: how is it structured?

The impact of EU debt on the EU market of safe assets.

Speakers: Gert-Jan Koopman and Guntram B. Wolff Topic: Macroeconomic policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: October 22, 2020
Read article Download PDF More on this topic More by this author
 

Policy Contribution

Emerging Europe and the capital markets union

The European Union's capital market union needs a revamp because of Brexit and the deep recession, and to underpin the European Green Deal. In particular, equity capital in the countries of central and eastern Europe is underdeveloped. These countries should take measures to facilitate equity finance, accompanied by reform at EU level.

By: Alexander Lehmann Topic: Banking and capital markets Date: September 17, 2020
Read about event
 

Past Event

Past Event

Bruegel Annual Meetings 2020 - Day 2

Second day of Bruegel Annual Meetings.

Topic: Banking and capital markets, Digital economy and innovation, Global economy and trade, Green economy, Macroeconomic policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: September 2, 2020
Read article More on this topic
 

Blog Post

Boosting the resilience of Europe’s financial system in the coronavirus crisis

Europe has a heavily bank-based financial structure, but bank-based financial structures are associated with higher systemic risk than market-based financial structures. The higher level of systemic risk in Europe suggests caution when pursuing policies that stimulate risk taking and debt creation by banks, especially in the wake of COVID-19. Priority should be given to financial diversification and equity finance.

By: Joost Bats, Aerdt Houben and Dirk Schoenmaker Topic: Banking and capital markets Date: July 17, 2020
Read article Download PDF More by this author
 

Policy Contribution

European Parliament

The European Central Bank in the COVID-19 crisis: whatever it takes, within its mandate

To keep the euro-area economy afloat, the European Central Bank has put in place a large number of measures since the beginning of the COVID-19 crisis. This response has triggered fears of a future increase in inflation. However, the ECB's new measures and the resulting increase in the size of its balance sheet, even if it were to be permanent, should not restrict its ability to achieve its price-stability mandate, within its legal obligations.

By: Grégory Claeys Topic: European Parliament, Macroeconomic policy, Testimonies Date: May 20, 2020
Load more posts