Greece 10-Year Bond Yield Soars to 9% as Prime Minister's Gambit Explodes; Snap Elections Likely, and Opposition Syriza Would Win

In the last three days, yield on the Greek 10-year government bond soared from 6.6% to over 9% before settling at 8.917%.



Prime Minister Antonis Samaras' Gambit Explodes

Greek bonds yields had already been climbing with the rise of the radical left Syriza party in recent polls. Icing on the yield-cake was a seriously misguided election ploy by prime minister, Antonis Samaras that blew up in his face.

Greece’s beleaguered prime minister, Antonis Samaras, used a bold gambit last week to win a confidence vote and preserve a coalition government with sagging support: he promised lawmakers that the country would evict its bailout lenders by the end of the year.

Yet Mr Samaras’s plan to make a clean exit from an EU rescue programme and cut short a companion lifeline from the International Monetary Fund appears to be backfiring in dramatic fashion.

Yields on Greece’s long term bonds pushed above 9 per cent on Thursday to their highest level this year as investors doubted that the government had the ability to finance itself without help – let alone press ahead with economic reforms.

Adding to the premier’s woes, Syriza, the radical left opposition party, has increased its lead in opinion polls and threatens to come to power within a few months – an outcome even some members of Mr Samaras’s centre-right New Democracy party now consider probable.

The trigger would be February’s presidential election, where the coalition will have to corral 25 extra votes to secure victory for its candidate. If it cannot, snap elections will be called in March.

SYRIZA Widens Lead Over Samaras' New Democracy

Recent polls shows SYRIZA Has Clear Lead Over New Democracy.

A new GPO poll conducted for Mega TV gives SYRIZA a 6.5 percentage point lead over New Democracy.

The survey, whose results were shown on the Anatropi program late on Monday, also places centrist To Potami in third place.

According to the poll, SYRIZA gathers 26.7 percent, New Democracy 20.2, To Potami 6, Golden Dawn 5.7, the Communist Party 5.7, PASOK 4 percent, Independent Greeks 3 percent, LAOS 2.1, ANTARSYA 1.6.

Other parties gained a combined 4.7 percent, while 18.2 percent of respondents said they have not decided yet.

The poll also suggests that the majority of Greeks do not want the presidential election in February to lead to early national polls. The results showed that 55.7 percent are against early elections, while 40.3 percent are in favor.

Snap Elections Likely

Even though Greek voters do not want early elections, polls show that outcome is highly likely unless Antonis Samaras somehow hijacks the election or picks up a huge percentage of the undecided electorate.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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