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30 Dec 2014
Greek contagion contained – MP
FXStreet (Barcelona) - Dean Popplewell, Director of Currency Analysis at MarketPulse explains that the Greek contagion was contained as the effect of political uncertainty was restricted to equities and bonds to Greece itself, without any adverse reaction in periphery markets.
Key Quotes
“Investors’ immediate reaction has seen Greek equities and bonds plunge, while other periphery markets (Italy, Spain and Portugal) are small rocked as conservative funds continue to flow into German bunds (hover around record high prices) and gold (+0.6% to $1,188).”
“Currently, there is no panic even from Europe’s second most indebted nation – Italy. It’s ten-year debt trades close to +2%, a long way from the +7% at the height of the debt and contagion crisis.”
“Even today’s Italian 10’s auction results, despite some mixed results, the positive price action would say more than anything else – there is demand willing to pay and support some record low yields for various tranches.”
“The EUR remains broadly steady outright and off it’s two-year low (€1.2124), and this despite single currency bears calling for a €1.20 print backed by the uncertainty surrounding Greece. It seems that the market does not have the momentum to follow through with conviction. Perhaps it requires greater market participation and an ECB QE announcement to up the immediate EUR negative ante. The situation in Greece highlights the view that the crisis in EMU is far from over.”
Key Quotes
“Investors’ immediate reaction has seen Greek equities and bonds plunge, while other periphery markets (Italy, Spain and Portugal) are small rocked as conservative funds continue to flow into German bunds (hover around record high prices) and gold (+0.6% to $1,188).”
“Currently, there is no panic even from Europe’s second most indebted nation – Italy. It’s ten-year debt trades close to +2%, a long way from the +7% at the height of the debt and contagion crisis.”
“Even today’s Italian 10’s auction results, despite some mixed results, the positive price action would say more than anything else – there is demand willing to pay and support some record low yields for various tranches.”
“The EUR remains broadly steady outright and off it’s two-year low (€1.2124), and this despite single currency bears calling for a €1.20 print backed by the uncertainty surrounding Greece. It seems that the market does not have the momentum to follow through with conviction. Perhaps it requires greater market participation and an ECB QE announcement to up the immediate EUR negative ante. The situation in Greece highlights the view that the crisis in EMU is far from over.”