Grexit Now Off The Agenda
Good morning and somehow we have managed to find ourselves in February after an incredibly volatile first month of the year.
After the elections, the spotlight remains on Greece and specifically what the newly-elected Syriza Party are going to do regarding the bailout from the ECB and the “Grexit”. Firstly, after months of scare-mongering, it looks likely that a Grexit is not on the cards and all concerned parties will sit down and find a suitable solution. Greek PM Tsipras has expressed optimism about finding a mutually beneficial solution, EU Commission President Juncker has called for compromise and Angela Merkel has said she does not see another Greek debt cut.
Talks have begun and it is most likely that there will be changes to the bailout but a debt cut would be surprising as surely this would then open the floodgates with other countries then feeling that they too should have their debts cut. So, it is a dangerous game to play. The markets seem to be a bit more stable and less concerned about the Greek issue at the moment.
Other than Greece, the markets will focus on Australia where tomorrow we are expected to see a 25bp rate from the Reserve Bank of Australia in their first rate move since August 2013. Sliding iron ore prices and 6% unemployment are behind this move from the current 2.5% interest rate.
Headline data today are PMI results from Germany, the EUrozone, UK, Canada and US.