Greek bond yields fall to record lows as country heads for snap elections
Greek Prime Minister Alexis Tsipras has called a snap election following his party’s defeat in the European Parliament elections, sparking a fall in government bond yields.
Syriza, the left-leaning party that won power in 2015 following backlash against economic reforms, suffered a defeat to the conservative New Democracy party, with results showing Tsipras’ party trailing at least nine points behind the opposition.
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Tsipras announced he would meet with the Greek President to discuss calling elections after the conclusion of local elections scheduled for next week.
The markets reacted positively to the announcement as the Athens Stock Exchange General Index was trading up more than five per cent and the yield on the benchmark 10 year government bond fell below three per cent.
Tsipras built his political career as a candidate that stood up to creditors and against demands to implement austerity, however, he was forced to U-turn on his position when Greece was offered the choice of a bailout or being kicked out of the euro zone.
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The prime minister has wound back some austerity measures since Greece came out from close economic supervision in August last year, however, analysts said the moves have not been enough to appease voters.
Political analyst Theodore Couloumbis told Reuters: “People are tired of this government, and its last-minute move to buy the votes of people who have really suffered from this (crisis).”