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Fasdal: Bonds caught between Greece and inflation

The stand-off between Greece and its creditors continues to dominate markets. Saxo Bank’s Simon Fasdal says bonds are particularly exposed after Greece postponed its IMF payment and here’s why.

While the risk of a Greccident is low, according to Fasdal, the risk associated with negative headlines has increased. After postponing the IMF payment on June 5th, markets will react stronger to any bad news which could trigger significant moves as investors seek to reduce their risk exposure, Fasdal says. He expects this will add support for core bonds like the 10-year German Bund.

While the ongoing Greek debt crisis could offer support for core bonds, inflation expectations could start to be a drag, Fasdal says. He notes that European equities are finding little support in surprisingly positive economic data, and instead are struggling against higher yields and a stronger euro.

03:35 minutes
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