The Greek Story Pauses For Now
Good morning! As discussed yesterday, Greece has been granted a four month extension of its financial rescue programme after its list of reforms were submitted and subsequently ratified. That was the good news. The bad news is that several National Parliaments now need to approve the bailout before it expires on Saturday. This should be a formality.
However, the Greek story doesn’t end here. Risks and pressures remain as in March large IMF repayments are due, and the next deadline for Greece is the end of April when it has to present details and legislation of the new reforms. This could lead to heightened tension, a break-up of the new ruling coalition and more unwelcome fiscal surprises. So, although we may be able to put this to the back of our minds for a bit, it will never be too far away from the news.
In the US, Janet Yellen testified in front of the Senate yesterday and as ever, kept her cards close to her chest. Investors were looking at hints on the next interest rate hike, but she never gives too much away. The most important thing to have been mentioned was “patience” and its removal from statements in the next couple of months. So, expect nothing just yet, but by June, we could see a rate hike. However, there will still be the flexibility that this may not be the case. She also commented on the labour market not being back to normal yet and there was no evidence to suggest that inflation was moving towards the 2% goal.
Today, Yellen continues her testimony, and Draghi and Carney are speaking again.