As worries persist about Greece's ability to fulfil its next IMF repayment on June 5, bonds have tumbled and the Euro has lost further ground against major currencies.
Two-year bond yields have reached almost 25 per cent - their weakest in a month - while 10-year bonds have reached 11.83 per cent. Meanwhile the Euro is down 0.85 of a cent against the US dollar at $1.089, also a one-month low.
Prime Minister Alexis Tsipras has said he will accept a sustainable "but not a humiliating" deal in order to avoid default on the €1.6bn due next month.
Negotiations, which will resume again today, will be held in the shadow of the comments made by Interior Minister Nikos Voutsis on Sunday, in which he explicitly stated that Greece may not have the money to make the repayment - which would surely result in an exit from the Eurozone.
Markets have also shown concern at a recent article by Finance Minister Yanis Varoufakis - in which he lays the blame for Greece's economy squarely on the austerity pushed by its creditors
Writing for Project-Syndicate, he said the Greek government was keen to implement "economic reforms emphasized by European economic think tanks" - and has the popularity to do so - but remains unwilling to maintain surpluses of 2-3 per cent through crippling austerity:
"The problem is simple: Greece’s creditors insist on even greater austerity for this year and beyond – an approach that would impede recovery, obstruct growth, worsen the debt-deflationary cycle, and, in the end, erode Greeks’ willingness and ability to see through the reform agenda that the country so desperately needs.
"Our government cannot – and will not – accept a cure that has proven itself over five long years to be worse than the disease."
He uses the following graph to compare the austerity suffered by Greece with the relative rcoveries by Ireland, Cyprus, Spain and Portugal, saying:
"Relative to the rest of the countries on the eurozone periphery, Greece was subjected to at least twice the austerity. There is nothing more to it than that."
However, comments from the IMF's chief economist Olivier Blanchard, speaking to French newspaper Les Echos, suggest Greece's creditors are standing firm.
“Considering that the most recent estimates mention a substantial budget deficit, we need credible measures to transform this into a surplus and maintain this surplus in the future,”
On the home front, SYRIZA is still widely popular. A recent Public Issue poll says 54 per cent of Greeks believe the SYRIZA-ANEL coalition is the best government for the country, while 63 per cent believe Alexis Tsipras is the best possible Prime Minister.
However, approval for the governments approach to debt negotiations has dipped nine points to 54 per cent in the past month, despite a 58 per cent majority wanting to "definitely not retreat" in talks.
