Prepare yourself (and your portfolio) for a coming debt crisis and a Chinese hard-landing (crash) 2010 - (update 7)

The market is preparing for a Greek default as the yield on Greek 2yr notes jumped to more than 12% from 8.3% in the last couple of days (from Wednesday 21st April 2010).

The reality for the bond markets in relation to the EU (PIIGS) spreads, is that a gap is widening between German bunds and the less stable EU countries; as Greece starts to go into a default death spiral.

The bond markets know that a default will be inevitable and so does the FX market, refer to the below chart:

Note that the support (in red) is essentially the EUR collapse (support) line, if it goes under 1.28 the EUR has collapsed and may drift to the lows reached in March 2009 (global financial crisis), prior to the liquidity rallies on global indices.

Although slightly oversold on a daily chart, the Time Series Forecast (TSF) is showing a 1.33 price; but all indicators continue to show a downward pressure.