Markets still complacent on Greece’s debt challenge

Our concerns that the markets have been under-estimating the challenge faced by the new Syriza-led Greek Government and the Troika in trying to reach a mutually acceptable solution to Greece’s debt problems were at least partly borne out last week.

Not only did Greek financial markets sell off sharply but, for the first time, there were at least tentative signs of contagion effects on other peripheral countries’ bond markets. But we suspect that the markets are still complacent.