Markets went on quite the roller coaster ride last week as Europe worked towards the most comprehensive plan to deal with the fiscal problems that have been plaguing the continent for some two years now.
Heading into Wednesday’s summit, bond yields had dropped quite a bit as expectations for an agreement had fallen considerably by Tuesday afternoon. However, as word trickled out on Wednesday that something big was in the works, the bond market sold off aggressively, pushing yields higher. In all, the two day move in 5yr bond yields was approx. 0.25%.
Since then of course, everyone will have seen some headlines in the news citing analysts who question the ratification and implementation of Wednesday’s proposal. This has culminated in the news released Monday afternoon that Greece will take the proposal to a national referendum. Given the resistance to the ongoing austerity measures in Greece that everyone has witnessed, some concern has emerged with respect to the survival of the deal itself.
The above is a long way of saying bond yields fell sharply, rose sharply, and have fallen again sharply, leaving us practically unchanged on the week.