16 Feb 2015
Markets expecting a short-term fix for Greece – Investec
FXStreet (Barcelona) - The Investec Team notes that with EUR trading little firmly against the USD, the markets might have priced in a minimal Greece ‘risk premium’ which signals that the markets strongly expect a short-term fix for Greece at eurogroup meeting.
Key Quotes
“The main point to note is that Greece needs funding pretty quickly, meaning a 'bridging loan' is a minimum requirement while other terms are negotiated, which is also referred to as 'kicking the can down the road' as the parties fudge some kind of short-term resolution.”
“Also we are yet to see Germany soften their stance or a credible plan from Greece on how a relaxing of their austerity terms will help them pay back their debts at a time when tax receipts are already on the decline.”
“As the Wall Street Journal highlights, "Any changes to the content or expiration date of Greece’s existing EUR 240bn bailout have to be decided by Friday, to give national parliaments in Germany, Finland and the Netherlands enough time to approve them before the end of the month.”
“Without such a deal, Greece will be on its own on March 1, cut loose from the rescue loans from the Eurozone and the IMF that have sustained it for almost 5yrs."
“The Euro remains fairly solid against the US Dollar, in the 1.14 handle overnight, although on the back foot against the Pound after last week's positive Quarterly Inflation Report. This would suggest minimal Greece ‘risk premium’ is priced in and the market is anticipating a short term fix for Greece. Expecting any 'source comments' to dominate today..”
Key Quotes
“The main point to note is that Greece needs funding pretty quickly, meaning a 'bridging loan' is a minimum requirement while other terms are negotiated, which is also referred to as 'kicking the can down the road' as the parties fudge some kind of short-term resolution.”
“Also we are yet to see Germany soften their stance or a credible plan from Greece on how a relaxing of their austerity terms will help them pay back their debts at a time when tax receipts are already on the decline.”
“As the Wall Street Journal highlights, "Any changes to the content or expiration date of Greece’s existing EUR 240bn bailout have to be decided by Friday, to give national parliaments in Germany, Finland and the Netherlands enough time to approve them before the end of the month.”
“Without such a deal, Greece will be on its own on March 1, cut loose from the rescue loans from the Eurozone and the IMF that have sustained it for almost 5yrs."
“The Euro remains fairly solid against the US Dollar, in the 1.14 handle overnight, although on the back foot against the Pound after last week's positive Quarterly Inflation Report. This would suggest minimal Greece ‘risk premium’ is priced in and the market is anticipating a short term fix for Greece. Expecting any 'source comments' to dominate today..”