Is that the end? Finally, after some epic, all night talks in Brussels we have a deal for a third Greek bailout which signals the end of any chances of a ‘Grexit’.
Donald Tusk announced that after talk of a Grexit and the rejected Greferendum, there is now “aGreekment.” Hopefully that is the last we’ll hear of that one as Greece now gets EUR86bn over three years, pending approval by the parliament in Athens.
Whilst Tsipras appeared and insisted he’d won some concessions on debt relief and medium term funding it seems that ultimately all the tough negotiations, disagreements and accusations of terrorism have seen the Greek PM capitulate with the threat of ejection from the Eurozone too great to overcome.
The Euro fell back to 1.10 against the USD as markets now realise that this is likely to be over, for a while at least as long as Greece can sort their economy and not burn through the 86bn too quickly, but it has been a costly exercise. Greece’s domestic economy has been hit hard in these last few weeks, consumer sentiment is battered after the Greek people found themselves queuing daily to withdraw a small amount of cash from an ATM and regardless of an outcome, we have new tensions and trust issues among the member states of the Eurozone.
Of course this still needs to get through the Greek parliament and given the measures agreed go strongly against the policies of the Syriza party it could be tougher than some hope – it is unlikely to pass through without fierce debate. Only then will it get voted on by the German Bundestag and given the vocal opposition from senior officials that too will not be easy.
In all likelihood though, the uncertainty, the confusion and the concern all caused by Greek default are no more – the Eurozone will continue on and battle collectively though all these economic difficulties. Until of course the next time…
Other news yesterday saw the release of trade balance data out of China. This missed expectations by a huge number, coming in at 46.5B compared to a 57B forecast and the last release of 59.5B.
Tuesday sees Australia with the first release as NAB business confidence data is due at 04:30 GMT 3 before later in the day UK CPI comes in at 11:30 which is forecast for a flat read of 0.0%. Core CPI, RPI and PPI are all released at the same time, although CPI is the headline number to watch.
Following that there is the German ZEW economic sentiment data out at 12:00, where we could see what impact the Greek situation has had locally in Europe’s largest economy before attention turns back to the UK at 12:15 when the Bank of England MPC committee will meet the parliament treasury committee to discuss inflation and the economic outlook.
The news day will round off with US retail and core retail sales figures at 15:30. Core retail sales are forecast to rise 0.7%. Last month was the first release in six where the number has not missed expectations, so traders will be watching to see if that trend returns.