Tuesday, September 7, 2010

European Stress Tests Minimized Risks

This is not really news, but now it's quasi-official--the WSJ has spoken--and spreads are affected (h/t Calculated Risk):

LONDON—Europe's recent "stress tests" of the strength of major banks understated some lenders' holdings of potentially risky government debt, a Wall Street Journal analysis shows.
From Calculated Risk:

After the WSJ story last night on the European stress tests, here is an update on a few European bond spreads:

  • The 10-year Ireland-to-Germany bond spread has risen to 376 bps. This spread is larger than during the financial crisis in May when the spread peaked at 306 bps.

  • The 10-year Greece-to-Germany bond spread is now 946 bps, just below the peak level of 963 bps in May.

  • The 10-year Portugal-to-Germany bond spread is now 351 bps, just above the peak in May of 349 bps.

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