Bond market is crazy: Greece a better debtor than the USA?

What a crazy bond market, we might say! Is Greece the better debtor than the USA? Is Athens more reliable when it comes to the probability of bond repayments? If we look at the yield on ten-year government bonds, then yes. Well, fair enough, we have to say that the US had raised its interest rates several times, which also led to a significant rise in the US yield.

On the other hand, we can say: Hey, the comparison is limping. The Eurozone has had zero interest rates for years. So it is understandable that even Greece has lower yields than the USA? That is not the case. For the past five years, we have compared the yield trends of the USA and Greece. First of all Greece. And what about that?

In 2015 the yield was still well above 10%, at a time when German bonds were trading below 1% on the bond market. So, despite the zero interest rate phase in Euroland, it is not self-evident that Greek yields (ultimately the level of the risk premium for the probability of default) are as low as they are today. Currently, the yield on Greek bonds is 2.02% (yesterday in the low even 1.94%), for US bonds there is currently 2.06%. Cheers!

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