The Siren Call of Greek Bonds

by Marilou Moursund on February 4, 2015

in Bonds,Debt,Foreign Markets

The S&P 500 gave up 0.4% right before the close on news that the ECB would no longer accept Greek government bonds as collateral.  From the linked Bloomberg article :

Stocks fell in the final 30 minutes of trading as the European Central Bank said it lifted a waiver on Greek government debt as collateral. During the debt crisis, which struck in 2010, Greece has met its obligations by issuing short-term bills to local banks, which pledged them to the ECB as collateral.

“This happened sooner than expected and the market’s a little shocked,” said Michael Block, chief equity strategist at Rhino Trading Partners LLC in New York. “This is the ECB turning the screws, not going to let Greek banks die but the clock is ticking. People thought the ECB would do this at the end of the month and that perhaps before then, a deal could be struck. I guess not.”

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