Greek bonds fall, yield curve inverts on political fears

Greek bonds extended losses on Wednesday, with yields on short-dated debt spiking sharply above longer-dated ones, as investors worried about the upcoming presidential elections that could catapult the leftist anti-bailout SYRIZA party to power.

The move follows a sharp sell-off on Tuesday after Greek Prime Minister Antonis Samaras brought forward the presidential vote, gambling his, and his country's future.

Yields on Greek three-year bonds shot up 34 basis points to 8.532 percent, the highest level since the bonds were issued back in July, and above equivalent 10-year yields which rose 11 basis points to 8.17 percent.

The inversion of yield curves, when short-term borrowing costs are higher than longer-term ones, is often an indication that investors fear the country is headed towards recession or default.

[Reuters]