No, it was not a bunga bunga party (not this time at least). Rather, the bond vigilante feeding frenzy recently let loose upon Rome was triggered — depressingly — by the resolution of the (immediate) crisis in Greece. Basically, investors are playing whack-a-mole with Europe sovereigns. This July 6 piece from Bloomberg explains it all:
“Now that an immediate Greek default has been avoided [the final austerity measure was passed a week prior–ed.], investors are looking for ways to play continued distress among countries including Italy, the euro-area’s third-largest economy, and Spain, its fourth… The yield on Italy’s 10-year bond reached the highest in almost three years.”
For many investors, returns continue to be unsteady, and since Europe has yet to present a united front in resolving this crisis, this “play” has, unfortunately, much to recommend it.
Edited by G. John Ikenberry.Cover image download. Proposed Essay Topics 1) American Foreign Policy and the Future of Multilateralism Over the postwar decades, the United States played a leadership role in building multilateral regimes and institutions across a wide range of policy areas. It was a founder of the United Nations and champion of the […]
U.S.–China Relations: Competition or Cooperation? The U.S. and China stand at the center of today’s most consequential global relationship—one that shapes trade, technology, security, and the future of international leadership.Great Decisions: U.S.–China Relations, a free classroom resource from the Foreign Policy Association, helps students explore the history, tensions, and interdependence between these two nations through […]
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