Greece’s government-bond market came under renewed pressure over the past week, as a global selloff in sovereign debt pushed yields sharply higher and prices lower across most maturities.
The yield on Greece’s benchmark 10-year bond rose to 4.455% on Sept. 28 from 4.205% on Sept. 21, an increase of 25 basis points, according to data from the country’s Public Debt Management Agency. Its price fell to 91.616 from 93.473 over the same period.
The move was broad-based. Greece’s five-year yield climbed roughly 21 basis points to 3.885%, while the 15-year yield increased nearly 26 basis points to 4.546%. The 30-year yield rose to 4.922% from 4.722%, and the two-year yield advanced to 3.426% from 3.291%.
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For investors outside Greece, the important distinction is that the selloff wasn’t primarily a Greek story. Borrowing costs rose substantially across major European sovereign markets, suggesting that global forces rather than a sudden reassessment of Greece’s creditworthiness were driving much of the move.
Germany’s 10-year yield rose to 3.636% from 3.453%, while Spain’s increased to 4.129% from 3.910%. Italy’s 10-year yield climbed to 4.583% from 4.327%, and France’s jumped to 4.745% from 4.450%.
Still, Greece underperformed Germany modestly. The spread between Greek 10-year debt and the benchmark German Bund widened to 82 basis points from 75 basis points. The five-year spread increased to 43 basis points from 39, while the 15-year gap rose to 69 basis points from 61.
The latest bout of volatility has its roots across the Atlantic. U.S. borrowing costs surged as tensions surrounding the Strait of Hormuz added to pressure in global fixed-income markets.
Following Washington’s rejection of an Iranian proposal to reopen the strategic waterway, the yield on the U.S. 10-year Treasury reached 5.26%, its highest level since 2007. The two-year Treasury yield, which is particularly sensitive to expectations for Federal Reserve policy, rose eight basis points to 4.94%.
