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Illustration: Sarah Grillo/Axios

The S&P 500 has enjoyed a strong year and equities around the globe have delivered solid returns, but every one of the world's major stock markets has underperformed 2019's grand champ: Greek government debt.

Why it matters: Long-dated Greek sovereign bonds have been one of the best-performing assets in the world in 2019, having delivered returns more than double the S&P 500 through Tuesday.

Background: Left for dead after a near-collapse of the economy, a debt and currency crisis, and a series of bailouts as recently as 2015, Greece is now so attractive investors are demanding less of a premium to hold Greek government bonds than comparable debt from the United States.

What they're saying: "Greece appears to have put the bailout era behind it," Joseph Trevisani, senior analyst at FXStreet, tells Axios in an email.

  • "Athens exited the last bailout more than a year ago, ended capital controls on September 1st and received an outlook upgrade to positive from [ratings agency] DRBS. Since Greece is no longer the problem child of the EMU, it's rates are moving lower to accompany the rest of the euro zone."
Expand chart
Data: FactSet; Chart: Andrew Witherspoon/AxiosSocial Image

By the numbers:

  • Yields on Greece's 10-year note traded at 1.2% Tuesday — a far cry from their all-time high levels in March 2012 0f over 40% in the midst of the European debt crisis — and are now 65 basis points lower than yields on the U.S. 10-year Treasury note.
  • The real winner for investors has been Greek 20-year bonds, which have delivered a whopping 47% total return year-to-date, according to FactSet.

While the yield on Greek bonds is low by historical standards, it is still significantly higher than similar government bonds from other countries in the eurozone and is attracting major inflows thanks to investors' continued search for yield.

  • German 10-year government bonds have a yield of -0.31% and bonds from other European economies like France and Sweden hold negative yields out to 10 years as well.

What's happening: Thanks to the ECB's recently restarted bond-buying stimulus program, declining inflation and debt, and a new center-right government in the country, Greece's 10-year bonds have seen yields fall by more than 300 basis points year to date.

With the market's current appetite for risk, the bonds are poised to continue their outperformance, Marc Chandler, chief market strategist at Bannockburn Global Forex, tells Axios.

  • "Stocks are rallying ... risky assets in general have rallied. As that’s happened Greece has rallied and it has these very favorable characteristics."
  • "A lot of investors have scar tissue around the Greek debt crisis, but there's a new group of investors in the market just looking to chase yield. They're saying, 'Let’s lock it in and not worry about what happened 10 years ago.'"

Go deeper

Updated 2 hours ago - World

North Korea claims latest missile test new weapon launched from submarine

North Korean state media claims the country's military fired this missile on Tuesday. Photo: Korean Central News Agency

North Korean state media announced that a detected ballistic missile launch off its east coast on Tuesday was a newly developed weapon test-fired from a submarine.

Why it matters: Pyongyang's latest in a series of recent missile launches into the sea happened hours after U.S. officials emphasized their commitment to restart negotiations on North Korea's nuclear weapons program, which have stalled since talks broke down during the Trump administration, AP notes.

4 hours ago - Politics & Policy

Manchin's massive means test

Illustration: Aïda Amer/Axios

Sen. Joe Manchin (D-W.Va.) is offering progressives a trade: He'll vote for their cherished social programs if they accept strict income caps for the recipients, people familiar with the matter tell Axios.

Why it matters: Manchin’s plan to use so-called means-testing for everything from paid family medical leave to elder and disabled care would drastically shrink the size and scope of the programs. It also would bring a key moderate vote to the progressive cause.

The China whisperer

Nick Burns. Photo: Chen Mengtong/China News Service via Getty Images

President Biden's nominee for ambassador to China will face aggressive questioning Wednesday about the most important, and potentially perilous, bilateral relationship in the world.

Why it matters: While Nick Burns is an experienced diplomat with support on both sides of the aisle, lawmakers want to use his confirmation hearing to force the administration into some tough positions on China.