2010 — European Sovereign Debt
The Greek Debt Crisis, 2010
Step 1 of 4
It's late 2009. Greece's newly elected government just revealed the country's actual budget deficit is far larger than previously reported — roughly double earlier official figures. You manage a macro fund holding Greek government bonds, previously considered about as safe as any other Eurozone sovereign debt.
Greece's deficit was revised from an originally reported figure near 6% of GDP to something closer to 12–13% of GDP (and higher still in later revisions) — a shock not just because the number was bad, but because the prior number had been wrong. Yields on Greek bonds start rising, but still trade relatively close to other Eurozone government debt; the market hasn't yet fully repriced the risk.