Greek yields highest since elections as Tsipras hits out at IMF

LONDON: Greek 10-year bond yields hit their highest level since September's elections on Tuesday, as Prime Minister Alexis Tsipras' criticism of the IMF stoked concerns about the country's willingness to implement its bailout deal.

In a television interview on Monday, Tsipras said the International Monetary Fund was not playing a constructive role in Greece's bailout and should make up its mind whether it wants to stay in the programme.

Tsipras was re-elected in September's snap poll with a mandate to implement the tough terms of a third IMF/EU aid package. That brought some calm in the battered Greek bond market.

But his comments are a reminder of the tough stance he took earlier this year during months of bailout negotiations that saw Athens flirting with an exit from the euro zone.

The yield on 10-year Greek bonds rose more than 25 basis points on the day to 8.87 percent, its highest since mid-September. Still, it remains about 10 percentage points below a peak hit in July on "Grexit" concerns.

"It's becoming more and more obvious that the new government will run into problems getting reforms through parliament," said Bayerische Landesbank rate strategist Norbert Wuthe.

"Social and political resistance is growing and there is a fear that's reflected in the local press that there could be new elections very soon."

Outside Greece, euro zone bond markets drew support from expectations that further ECB stimulus will remain on the cards while inflation expectations stay low.

A bond market sell-off was thrown into reverse on Monday as oil prices tumbled and European Central Bank President Mario Draghi said he stood ready to deploy further stimulus to achieve the central bank's inflation target.

His remarks followed easing by the central bank last Thursday that fell well short of market expectations.

"What people are looking at is inflation expectations, the oil prices and putting this together with the rather dovish remarks from Draghi over the weekend," said Benjamin Schroeder, a strategist at Commerzbank.

The yield on benchmark 10-year German bonds, which fell 8 basis points on Monday, was steady around 0.60 percent. It is down 14 bps from 0.74 percent on Friday, the highest level in almost three months.