These are followed by the political sphere

New evidence of the return to normal after the earthquake related to Dubai, the pressure fell yesterday on the obligations of "peripheral" in the euro area States, those whose finances are deemed the most fragile. The Greece, which raises the most questions, saw its risk premium reflow 165 basis points. In other words, the gap between the rate 10 years Greek and the German Bund was 1.65 yesterday, while it exceeded 2 Thursday, just after the announcement of the incompetent of Dubai. CDS (credit default swap") of the Greek sovereign debt relaxed also Tuesday, from 191 to 174 points. The CDS shows how much the market considers the cost of protection against a potential default of the country. "Last week, there was an exaggerated movement: the market has developed the Greece at the same level as the Turkey," commented Patrick Jacq at BNP Paribas.

A correction after the sharp tensions of last weekend is at work, on a background of decline in risk aversion. Indeed, Irish or Portuguese rates were also among those that fell more yesterday in the euro area. Many strategists believe that the environment is conducive to a convergence of European rates by the end of the year. "Central banks maintain for the time being a speech and accommodating bias, which promotes risk-taking strategies, so bonds which offer the best performance", explains Guillaume Baron, in Société Générale. Financial institutions take very good account with the European Central Bank (ECB) and investing in loans to State.

Short term bet

Other factors may explain the relaxation of Greek rates. "Yesterday, the country has made interesting announcements regarding its statistics", note Ciaran O'Hagan, in Société Générale. Severely étrillée for the lack of reliability of its economic figures, the Greece has indicated that it intended to create an independent agency. The new Government had established the October surprise, by multiplying by two the initial forecasts of budget deficit for 2009. Moreover, investors were reassured by information on the application for Greek State bonds. Press articles referred to the purchase of Greek debt securities by Chinese banks. The team of Société Générale, which recognizes that such support have already existed in the past to sovereign securities, doubts however. She believes that China would rather have interest to strengthen its industrial investment in the country. The National Bank of Greece, the largest the country credit institution, for its part indicated that it had increased its stock of domestic government bonds since early November of EUR 1.8 billion.

Fears about the application of Greek bonds had shaken the markets before the wind of panic come to Dubai. Monetary authorities have indeed recommended that domestic banks take less liquidity from the ECB in the operation to 12 months in December. Operators are then inferred that they have fewer resources to buy Greek bonds.

Beyond the bet of short term convergence between Greek and German rates, investors were of deep concern. These are followed by the political sphere. Last weekend, the Vice-President of the ECB, Lucas Papademos met the Prime Minister, Georges Papandreou, in a meeting "was not announced. Economic policy and Europe have been at the heart of their discussions.