Greece’s unemployment rate rose to 8.6% in October, up from 8.2% the month before. This increase indicates a growing number of unemployed people in the country. The new numbers point to economic troubles impacting different sectors and the job market. This rise may affect economic planning and policies in Greece.

Economic Warning Sign

This unexpected jump in Greek unemployment to 8.6% serves as a strong warning for the country’s economy. It ends a trend of improvement that began after unemployment peaked above 25% in 2013. The increase may signal weakening consumer spending and a possible economic slowdown in the last quarter of 2025. This news arrives during a difficult time for Europe, as the November manufacturing PMI for the Eurozone is at 48.5, indicating ongoing contraction. With the European Central Bank keeping its deposit rate at 2.50% to fight persistent inflation, the decline in Greece’s labor market raises concerns. We believe this could hint at a broader economic slowdown in the region. For equity traders, this suggests a negative outlook for Greek assets in the short term. We recommend considering put options on the Athens Stock Exchange General Index or on exchange-traded funds (ETFs) that track Greek stocks to prepare for a potential downturn. This strategy offers a defined-risk method to profit from likely growing negative sentiment. In the bond market, this news may push Greek government bond yields higher compared to German bonds. We expect the gap between the Greek 10-year bond and the German 10-year Bund, currently at 145 basis points, to widen. A pair trade shorting Greek bond futures and going long on German Bund futures could effectively capitalize on this trend.

Market Volatility Expectations

This data also increases risks for the Euro, although its direction largely depends on the ECB’s policies. We see this as a chance to buy inexpensive, out-of-the-money put options on the EUR/USD pair. This strategy offers a low-cost way to hedge against the possibility that this Greek data might trigger a bigger downturn in the Eurozone economy. Finally, we expect implied volatility on European equity indices to rise as markets react to this negative news. Increased uncertainty often leads to higher option premiums. We see value in buying call options on the VSTOXX, the volatility index for the Euro Stoxx 50, to benefit from the anticipated surge in market tension. Create your live VT Markets account and start trading now.

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