By Joseph Adinolfi, MarketWatch
Investors are concerned about a confrontation between Syriza and
the troika
NEW YORK (MarketWatch) -- The yield on the 10-year Greek
government bond climbed more than a full percentage point
Wednesday, hitting its highest level since July 2013, on continued
worries that Greece's newly elected government could force a
showdown over debt relief with the country's lenders.
The Greek 10-year yield surged 103.5 basis points to 10.831%,
according to Tradeweb data. The yield was at 10.731%, up 93.5 basis
points from Tuesday's close, in recent trade.
U.S. Treasury yields, meanwhile, were generally lower as stocks
climbed and as investors awaited the end of the Federal Reserve's
two-day policy meeting and an expected statement on monetary
policy.
Speaking to his new cabinet Wednesday, Greek Prime Minister
Alexis Tsipras said he would move quickly to negotiate some form of
debt relief with the International Monetary Fund, the European
Central Bank and European Commission.
Tsipras said his administration won't continue with plans to
privatize PPC, the country's largest power utility, and Piraeus
Port, the country's biggest port. It also plans to increase the
minium wage.
Investors worry that because of the coalition agreement between
Syriza and the antibailout Independent Greeks, the two sides won't
be able to reach a new agreement on how Greece will repay its
loans, and the bailout will collapse, leaving Greece to default on
its debt.
"The concern is that their coalition [with the Independent
Greeks] is antiausterity," said Jonathan Rick, interest rate
derivatives strategist at Credit Agricole.
Rick said the market is more worried that debt renegotiations
will result in a recouponing or an extension in the maturity of
Greek bonds, which it sees as much more likely than a Greek
default.
The selloff in Greek debt had a spillover effect on the debt of
other Southern European countries. The Portuguese 10-year
government bond yield added 15 basis points to 2.363%, while the
Italian 10-year gained five basis points to 1.588%.
In the U.S., Treasury yields initially moved higher in the
global day, but money flowing out of European debt pushed yields
lower by mid-morning in New York.
Also read: Doubts grow about mid-year rate hike, but Fed won't
express any
Two-year bonds sold off ahead of an auction of $26 billion in
two-year notes set for Wednesday afternoon.
The 10-year Treasury yield was down 3.1 basis points to 1.794%.
The two-year yield was up 0.4 basis point to 0.514%.
Here's what Treasury investors were watching Wednesday:
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