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Interesting day in bunds where we saw initial weakness as the safe haven bid was unwound, only to see it all reverse at the end of the day! GGB 2yr got messy at one stage on headlines (needless to say, no IMF repayment was made) and was last seen 50bp higher at 35.75% at the time of this writing. YTD Greek banks on average have lost 52-61% of their value with Eurobank, the worst performer (-61% YTD).

One area we should keep an eye on is the U.S./bund 10yr yield spread, currently quoted at 155bp. This spread will start taking its lead from the euro, so when that starts to lose favor keep a watchful eye on TY/RX.

Asian shares were very volatile, Shanghai in particular, trading with a 10% variation (daily low to high) today as PBOC were active again. In Europe we did see small gains intraday in DAX and CAC but neither could hold on and actually closed well into negative territory both down over 1%. UK FTSE never got into the green all day and closed -1.5%.

Credit markets are almost closed, we hear! Trades are happening by appointment and to even move 1Mio EM bonds (at an opening price) is almost impossible. It is not uncommon to hear an indication only to trade 2% away from it. No one is standing up to prices and to liquidate even a small portfolio can take weeks. Worth noting, it is not worth partially selling bonds unless you can clear the position! Because once there is a traded price ALL holders will have to remark the book. That is unless it is on the back book (Balance Sheet) where MTM (Mart-to-Market) is not necessary daily for all books.

One can only remember in Japan when stocks/bonds went liquid and they simply readjusted the laws for “Bad Debt” which was once 30 days without payments, extending it to 180 days (six months), before it was declared a default. Don’t think we are quite there yet but the longer it takes the further it goes. Therefore, we may see yet an attempt to extend the deadline for default to pretend Brussels and the euro are still OK for now. If the IMF simply extends the payment date by 6 months, then magically there is no Greek default. So let the games begin.