My first comment is that is pretty annoying to have to deal with Greece volatility this Sunday when I would rather bask in the US Womans World Cup win!! #USAUSAUSA…truly dominant performance.
My second comment is this feels a lot like last Sunday if you look at price actionin the Euro and global markets. Meanwhile tonight versus last Sunday the Eurogroup feels even more vindicated. They didnt call for the referndum and its not up to them to interpret the results. They may be interested in letting everyting breath for a while and see how Greece reacts. Right now they dont have to react.
On Euro trading since the NO vote: the Euro did exactly what it did last weekend on sunday when it dropped quicky inside 1.10 before buncing back to 1.1080. Last Sunday the intraday volatility on the currency was over 4% and the Euro’s eventual strength as markets opened Monday was unexpected.
Deja vu?
Bonds are eacting the same way was they did last Sunday and we now should see the BUnd move even further inside last weeks range. We said last week that we expect the 10yr Bund to move inside of 0.50%
What else can you expect?
- PIIS(no longer PIIGS I guess) peripheral yields up
- Treasury yields down and will test through last weeks lows
- Equities down globally with the Germany hit hardest (trading 1.8-2.5x US to the downside but Spain and Italy worse
- EM FX will be hit
- Yen will rally
- Oil and commodity currencies down on broad risk-off sentiment
Key levels – EUR holding below 1.10, JPY below 122, EURGBP below 0.70. If we consolidate below two of these three levels we will like see further moves in the same direction.
China also rallying on open and pulling back but still up onthe day. Watch to see if negative reverasal close will puts more sppoks ionto globoal players who think China is next to blow. We dont…
Stay tuned…