Spreadex Market Update
Greece proposes 2 year ESM bailout, whilst US gets some blockbuster data
After a deluge of varying headlines all hinting at something big, news arrived that Greece had effectively proposed a third bailout, just as its second prepares to be put to sleep. This 2-year deal would be supplied by the European Stability Mechanism, concurrent with debt restructuring AND not involve the IMF; importantly it would also leave any debt relief discussions on the table to be potentially picked up at some point down the road.
Of course any deal discussion comes with a meeting of the now ubiquitous Eurogroup, and a teleconference between the region’s finance ministers is scheduled for this evening. Yet whilst in many ways this is an improvement on where we were at the start of the day, the lack of clarity around these headlines and the general uncertainty surrounding the entire situation has meant the European markets have struggled to run with any positivity in the way they have done in the past, especially with roadblocks like the German Bundestag standing in the way of any fresh bailout.
With the Eurozone deep in the throes of its (sort of) Greek endgame the USA had its own blockbuster news to chew over; whilst the Chicago PMI was once again below 50 (but still better than last month’s figure), the latest consumer confidence data smashed expectations to cross the 100 mark, providing the hawks in the Fed with a little treat this Tuesday afternoon. This news may have struggled to break through on the markets as the Greek situation ramps up, but it is an important step on the road to a potential rate hike later in the year.
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