Treasuries Weaker After Tentative Cyprus Bailout News
Euros moved to their highest levels since March 15th after a tentative Cyprus bailout deal was announced late Sunday. US Treasuries have been following Euros closely each time a new panic hits the market. This was seen both after the Italian election on 2/25 and the initial breakdown of Cyprus bailout negotiations last Monday.
Accordingly, the first move in response to the prospects for "a deal" has been for Treasury yields to follow euros higher. 10yr Treasuries are roughly 2.5bps higher at 1.956. The night is young and European markets themselves have yet to fully trade the news, which may look quite different by morning.
For now, we know that a deal is being "presented to EU finance ministers for discussion," according to Reuters.
More from Reuters: "Deposits below 100,000 euros in Laiki will be transferred to Bank of Cyprus. Deposits above 100,000 euros, which under EU law are not insured, will be frozen and will be used to resolve debt. It remains unclear how large the writedown on those funds will be.
The EU spokesman said there would be no "levy" imposed on any Cypriot banks, with the package requiring a full "bail-in" of uninsured depositors, which is likely to mean heavy losses for those with large holdings in Laiki and potentially Bank of Cyprus, where many Russians hold bank accounts"