Almost exactly four years after Greek bonds were in a bidless freefall during the summer of 2015 political disaster which almost saw Athens break away from the EU, on Monday Greek 10Y yields dropped to an all time lows, sliding as low as 2.013% - below US 10Y Treasurys which are trading at 2.035%...

... after Greece’s centre-right New Democracy party led by Kyriakos Mitsotakis regained power in the country after a sweeping general election victory with the party securing 40% of the vote and a comfortable majority of 158 seats in the 300-seat Parliament.

Tsipras' party, Syriza, got around 31.5% of the vote, having failed to deliver on any of his campaign promises when he stormed on the Greek scene 5 years ago, and in fact betrayed most of his voters when he, too, fell into line and did all Europe demanded after the ECB took Greek banks hostage, and a Greek referendum was summarily scrapped when the outcome was contrary to what Belgium wanted.

Mitsotakis' victory was a landslide, on a clear mandate for change, pledging more investments and fewer taxes.

Ironically, his win appeared driven by fatigue with years of European Union-enforced belt-tightening, combined with high unemployment, after the country almost crashed out of the euro zone at the height of its financial travails in 2015. The paradox is that a ND victory assures even worse conditions for what's left of the Greek middle class, and even more compliance with European demands, hence the spike in Greek bonds and bounce - at least initially - in Greek stocks.

Mitsotakis said in a televised address that the election outcome gave him a strong and clear mandate to change Greece.

“I am committed to fewer taxes, many investments, for good and new jobs, and growth which will bring better salaries and higher pensions in an efficient state,” Mitsotakis said.

The loser, Tsipras, said he respected the will of the Greek people.

“Today, with our head held high we accept the people’s verdict. To bring Greece to where it is today we had to take difficult decisions (with) a heavy political cost,” he told journalists.

Tsipras took over from the conservatives in 2015 as Greece was at the peak of a financial crisis which had ravaged the country since 2010. Initially vowing to resist deeper austerity, he was forced into signing up to another bailout months after his election, a decision which went down badly with voters.

The handover will take place on Monday, after Mitsotakis’s swearing in as new Prime Minister.

Sunday’s snap vote was the first national election since the country shook off close scrutiny by its European partners who loaned Greece billions in three bailouts. Tsipras signed up to the latest, in 2015, in return for debt relief.

Mitsotakis, 51, assumed the helm of New Democracy in 2016. Although he is regarded as a liberal, his party also harbors members with more right-wing views. Golden Dawn, an extreme right-wing party detractors accuse of having neo-Nazi sympathies, lost significant ground with early results suggesting it may not reach the 3 percent threshold to parliament.

“The basic reason (for the result) is the economy,” said analyst Theodore Couloumbis. “In the past 4.5 years people saw no improvement, on the contrary there were cutbacks in salaries and pensions,” he said. The focus now turns to Mitsotakis’s picks for the key economics ministries - finance, energy, development and foreign affairs. He has been tight-lipped on choices during the campaign.

Mitsotakis will inherit an economy that is growing at a moderate clip - at a 1.3% annual pace in the first quarter - and public finances that may fall short of targets agreed with official lenders.

The Bank of Greece projects that the 3.5% of GDP primary surplus target that excludes debt servicing outlays is likely to be missed this year and reach just 2.9% of economic output. With Greece still challenged by its debt overhang, the fiscal policy stance of the new government will be closely watched.

According to Reuters, the real test will be next year’s budget with Mitsotakiss expected to outline the key contours in the traditional economic address in Thessaloniki in September. “I want the government that will be elected to do its best for the people, who are hungry,” said pensioner Christos Mpekos, 69. “To give jobs to the young so they don’t leave.”

Naturally, Tsipras says that a vote cast for Mitsotakis would go to the political establishment, which forced Greece to the edge of the precipice in the first place. The irony is that Tsipras was roundly criticized for mismanagement of crises - not to mention selling out to Europe after vowing to fight Brussels when he was elected - and for brokering a deeply unpopular deal to end a dispute over the name of neighboring North Macedonia.

Meanwhile, Greece wrapped up its last economic adjustment program in 2018 but remains under surveillance from lenders to ensure no future fiscal slippage. While economic growth has returned, Greek unemployment of 18% is the euro zone’s highest.

The market reaction was clearly favorable, with Greek 10Y bonds briefly yielding less than 10Y Treasurys. Greek assets have been in vogue since May’s European election when Syriza suffered a crushing defeat; The Greek stock market, the ASE general index, gapped higher at the open although it failed to sustain momentum and reverses modest losses, and was last trading down 0.6% to 889.46; Greek banks benchmark index slips 2.7%.