The Markit iTraxx Financial Index of credit-default swaps on 30 European banks and insurers climbed five basis points to 84 basis points. While that’s the highest in more than a year, it’s still a fraction of its peak of more than 350 basis points in November 2011. A basis point is 0.01 percentage point.

Piraeus Bank SA’s 500 million euros ($562 million) of 5 percent notes maturing in March 2017 dropped 5.6 cents on the euro to a seven-week low of 61.8 cents, pushing the yield up to 38.3 percent, according to data compiled by Bloomberg.

?“Until there’s some clarity on Greece, it’s going to be hard to see an end to this nervousness and risk aversion,” said Juan Esteban Valencia, a credit strategist at Societe Generale SA in Paris. “A lot of investors are standing on the sidelines. It’s all negative sentiment and the fear of the unknown.”

Eoin Treacy's view

The financial sector has some of the greatest short–term exposure to the potential for an unruly Greek exit. However individual constituents that come through this episode in positions of relative strength have some of the better potential for continued outperformance once the dust settles as central banks release additional infusions of liquidity.

The Dow Jones Euro STOXX Banks Index has been consolidating in the region of the upper side of a more than year long range since March and will need to continue to hold the region of the 200-day MA if potential for additional higher to lateral ranging is to be given the benefit of the doubt.  

The FTSE-350 Bank Index rallied in March to break a two-year progression of lower rally highs and will now need to hold the region of the 200-day MA if potential for additional higher to lateral ranging is to be given the benefit of the doubt. 


Wide variability is evident in the performance of European banks. For example HSBC continues to deteriorate while UBS has outperformed but is susceptible to some consolidation of recent gains.