Fathom’s proprietary indicators gauge the market-implied likelihood of euro area sovereign defaults. There were broad-based declines in the indicators in March and, for most countries, they remain low by historical standards. This is despite a weaker growth environment and indications that some governments may seek to loosen fiscal policy. Political risk, a major driver of uncertainty during the heyday of the euro area debt crisis, also appears diminished in 2019 ― with little reaction in the default indicators to news concerning national parliamentary elections scheduled in Spain, Portugal, Greece, Finland and Belgium. Indeed, Fathom’s proprietary euro exit indicators are now below 10% for all countries, suggesting that investors do not expect these elections to seriously call into question membership of the euro.
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