This is just a quick thought on the Euro and European government bond yields.  We’ve seen a dramatic increase on a percentage basis on yields in European economies (Germany’s 10 year bond went from .08% to over .70% in a manner of weeks) and I’ve read several articles about reflation and higher inflation expectations off of very little economic data.  While the rise in yields have been dramatic, they’ve been at extremely low levels and are still extremely low by any standards.  I believe we could see bond yields across Europe continue to rise depending on what language and news surrounds Greece and their willingness to agree to creditor’s demands.  I also believe you could see the Euro fall versus the dollar in the coming weeks testing it’s lows and parity, especially if an agreement is not reached.  Another possibility is the markets hail Greece leaving the Euro and you see the Euro appreciate, not depreciate.  I don’t believe this will happen but anything is possible.

Author: Jared Toren