Spreadex Market Update
Creditors shift into action mode after Greek proposal despite German scepticism
Thursday evening’s Greek proposal really seems to have got the creditor cabal salivating, with Christine Lagarde, Mario Draghi, Jean-Claude Juncker and Jeroen Dijsselbloem preparing to discuss the latest submission at lunchtime today. Even more promising than that is the fact that Dijsselbloem has stated that the Eurogroup could make a ‘major decision’ on the issue during Saturday’s meeting of the region’s finance ministers; if that decision is a thumbs up, the EU summit on Sunday could be cancelled. No wonder the DAX and CAC have spent the morning regaining the week’s losses as fast as they can.
The Eurozone seems to be as close to a deal as it has done for the past 5 months, with progress seemingly genuine and credible. Of course, the Greek government still need to vote on the plan (reportedly late this evening), with discussion over debt relief remaining the key factor. Germany also appears to need convincing; various MPs have voiced scepticism over everything from the lack of mention of the Orthodox Church (the country’s biggest landowner), the similarity between this proposal and the one rejected by the referendum ‘no’ vote, and the general issue over trust between Greece and its creditors. Yet the tides seem to be shifting, and the Germans are increasingly replacing Greeks as the villains of this saga.
A better than expected UK trade balance figure only helped the FTSE hold onto its Friday gains, supported by the continued stability in the commodity sector. The US futures have seen similar, if slightly less robust, gains, no doubt helped by the spanking the dollar has been getting this morning from the euro and the pound. A speech from Janet Yellen will be the main focus for the US markets this afternoon, especially interesting since it comes less than a week before she testifies in front of the Senate Banking Committee.
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