From BenZinga:
It would appear that sovereign debt concerns in Europe are beginning to push themselves back into the forefront. Investors are dumping both Irish and Greek bonds, driving yields and CDS premiums to near record levels.
Yesterday, Irish credit costs hit a record high as bonds fell after the resignation of Jim McDaid, a member of parliament for Ireland's Fianna Fail party. The resignation added to concerns that the government would fail to muster the votes for planned spending cuts and tax hikes.
“Investors are worried about political factions coming into agreement about getting fiscal policy back on track,” said Andrew Wilkinson, senior market analyst for Interactive Brokers.
Despite higher yields and rising CDS premiums on Irish and Greek debt, the Euro has been holding up quite well. Six months ago, when the EuroZone crisis was in full swing, the Euro currency traded below $1.20. Currently, however, the EUR/USD is trading at $1.4015.
I would posit that they never went away. The difference now is that I believe folks have determined that the EU will allow an "orderly" restructuring of sovereign debt. Do they have a choice? I have long maintained that with many of these governments, fiscal austerity will be promised - but delivered is another story. The people will not change their ways because the government has told them to. They have been through this many times (at least those countries most affected) and will simply run the ruling party out of town. Euro might hold these levels, but I am not convinced. Still like the commodity/rate currencies over the USD or EUR.
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