Greece

Welcome to the point of no return

Nearly five years into the global credit crunch, you get a feeling for when something has reached the point of no return, when no amount of reassurance, promises or policies will fight the tide of markets. But to be sure, this is not to define markets as pure ‘speculators’, rather rational individuals and entities that are removing deposits from Greek banks, reducing their exposures to all types of market risk and doing their best not to be crushed by a moving train.

16/05/12 @ 12:44 GMT by Simon Smith, Chief Economist

Greece pulled in opposite directions

There were some more solid hopes for the formation of a government in Greece today, but indications so far are that it’s still proving to be tough going. The third party (Pasok) is pushing for a unity government, in the hope of a further election which would no doubt raise the prospect of more demands from international lenders. Read more

11/05/2012 @ 12:59 GMT

Reality bites

The euro’s break below the 1.30 level has been sustained overnight and it’s notable that the dollar has risen in all but two of the past nine sessions, looking at the dollar index chart. The political events in Europe, both in France and Greece, have served to enhance the more risk-averse trend that was already in place last week. Furthermore, in Europe we are seeing fresh signs of stress in the banking sector, such as widenings in cross-currency basis swaps and also Libor-OIS spreads. Read more

10/05/2012 @ 07:42 GMT

Creeping political paralysis

The implications of events in both France, and more so Greece, are seeping through markets and have made themselves known within most asset classes. In FX, it’s created further pressure on the high-beta currencies, with AUD/USD nudging very close to parity in overnight trading. The Kiwi and Mexican peso are also notably softer. On commodities, gold has pushed below the USD 1,600 level, down 2% yesterday and, significantly, breaking below the long-term uptrend line drawn from the November 2008 lows. Read more

09/05/2012 @ 07:00 GMT

Greece again

It had almost reached the stage where the markets could go several days without thinking about Greece, which is in marked contrast to a couple of months ago. After the weekend’s election, that seems to be changing as the various parties struggle (so far unsuccessfully) to form a government. This task is currently being undertaken by the second biggest party (Syriza), after the New Democracy group failed to get anywhere. The reason for concern is that the negotiations currently taking place are between parties far more keen on renegotiating current bailout deals. Read more

08/05/2012 @ 12:18 GMT

Total wipeout

The deal is done, credit default swaps are likely to be activated and in one fell swoop Greece’s debt mountain has been cut by EUR 100bln. But what’s the outlook for Greece now and does this mean the worst is over in terms of the debt situation?

09/03/12 @ 15:28 GMT by Simon Smith, Chief Economist

A great result for Greece

Greece announced the details of the largest sovereign debt restructuring in history this morning, with private sector bond-holders finally recognising that the deal on the table was probably a much better one than they were likely to get by holding out. According to a statement from the Greek government, the participation rate of investors in the debt swap was extremely high at 95.7%, no doubt encouraged by the threat of collective action clauses being imposed. Some EUR 152bln of Greek-law bonds were tendered, together with EUR 20bn of foreign-law bonds. Read more

09/03/2012 @ 08:20 GMT

Greek PSI optimism soothes frazzled nerves

Amidst indications that private sector bond-holders are mostly inclined to accept the debt-swap deal offered by the Greek government, the mood music in markets has improved still further this morning. The euro is above 1.32 after languishing near 1.31 for a time yesterday, and European equities are up by more than 1%. The gold price is back above USD 1,700, the Aussie has recovered a full cent from its overnight low, and bund yields are higher. Read more

08/03/2012 @ 11:06 GMT

Underlying unease

Ahead of today’s ECB and BoE meetings, and the impending Greek PSI announcement, both investors and traders displayed an understandable reluctance to commit to risk yesterday, although overnight nerves steadied just a little. For example, the single currency is back near 1.32, after lingering threateningly near 1.31 yesterday afternoon. The recovery is partly on the back of positive noises regarding participation in the Greek debt-swap, with the minimum participatory level (below which would mean a disorderly default) apparently set to be reached. Read more

08/03/2012 @ 08:22 GMT

Beyond the Greek PSI

We’ve not talked about Greece that much over the past couple of weeks (most has already been said), but it’s worth reflecting on ahead of the PSI deadline of tomorrow afternoon. Whilst markets are all about pricing in uncertain events, the truth is that there are a lot of binary outcomes from this deal which the markets find difficult to allow for. Will CDS be triggered? Will CACs be activated? The truth is that should the results be known late Thursday, early Friday, there is going to be much to digest. Read more

07/03/2012 @ 12:36 GMT

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