Daily Insight
Group Economics Macro & Financial Markets Research
Greece deal this week
Nick Kounis, +31 20 343 5616 ,
23 June 2015 • • • •
European meetings set scene for a deal for Greece this week, triggering market surge Scramble to meet deadline for IMF payment given parliamentary processes… …while bank liquidity remains an issue, with another ECB meeting scheduled for Tuesday Greek deal this month should limit damage to eurozone economy
New Greek proposal seen as positive step New proposals by the Greek government, which made
Greece bank deposit flight intensifying
concessions to the demands of the eurozone and the IMF, have opened the way for a deal between the country and its creditors later this week. Eurogroup President Jeroen Dijsselbloem noted that the new proposals ‘are seen as a positive step in the process’. It was hoped earlier in the day that they could lead to a deal already at the Euro Summit. However, Mr Dijsselbloem explained that ‘given the very little
Households and companies, EUR bn*
240 220 200 180 160
time that the institutions have had to look at them, they were
140
unable to give us a full and in-depth assessment’.
120 100
Deal likely later in the week The Greek authorities and the institutions would now get into the specifics of the proposals, including ‘doing the calculations’
04
05
06
07
08
09
10
11
12
13
14
15
Source: Thomson Reuters Datastream, ABN AMRO Group Economics *May and June (up to Monday) data are estimates based on reports
as well as agreeing on a list of ‘prior actions’ needed to be carried out to unlock funds. Apart from the details, there
Race against the clock to meet IMF deadline
apparently remain some differences of substance, such as the
However, we are not out of the woods yet. A deal later this week
scale of cuts to pension expenditure and the extent of VAT
would still leave Greece scrambling to make the deadline for its
hikes, for instance in categories such as electricity and food.
IMF payment on 30 June. The ‘prior actions’ and the deal itself still
So it is certainly not a ‘done deal’ though prospects look to
would need to through the Greek parliament. Several member
have brightened considerably.
states also may need to obtain parliamentary approval. After that the funds would need to be disbursed. At the same time, there are
Markets surge as investors price in successful outcome
only five working days left. Presumably, the IMF could allow
Financial markets already moved to price in a high probability
Greece some flexibility. Although Christine Lagarde has said there
of a successful outcome, with peripheral spreads narrowing
will be no grace period and Greece would immediately be in
and equities rebounding sharply. This reflects that a deal
default, under normal IMF procedures there is some latitude.
reduces the chances of wider financial contagion to peripheral countries and eurozone banks.
Greek bank liquidity remains a major concern Perhaps a more important issue is Greek bank liquidity. Deposit
Deal would reduce risks to eurozone economy
withdrawal looks to have continued at a blistering pace on
Furthermore, it also reduces the risks to the eurozone
Monday. We estimate that over EUR 10bn has been taken out of
economy. There were some early indications that the financial
the banks so far this month (see chart), while another EUR 5 – 10
stress and uncertainty were hurting confidence indicators. A
bn could leave given the most recent developments. The ECB
deal this week should limit the fall-out. Although sentiment
continues to sanction ELA, and has another meeting on Tuesday
indicators could still soften in June (though consumer
where it will likely sanction another rise. The big question is
confidence held up well), we would expect a quick recovery.
whether the Greek government and European leaders did enough
The fall in oil prices, the decline in the euro and easing bank
on Monday to restore confidence and stem the flow. The risk is
lending conditions should see the economy strengthening as
that if deposit flight accelerates, the authorities will have no choice
worries about Greece recede.
but to implement deposit and capital controls.
2
Greece deal this week – 23 June 2015
Financial markets Currency markets
Close
Change 1 day
Change 5 days
Change YTD
EUR/USD USD/JPY
1.1338
-0.2200
0.8539
-6.2975
123.37
0.0487
-0.0243
2.9456
AUD/USD
0.7728
-0.0517
-0.2710
-5.3521
USD/CHF
0.9219
0.1630
-1.1791
-7.2442
NZD/USD
0.6869
-0.0437
-1.6748
-11.8794
GBP/USD
1.5820
-0.0632
1.1832
1.5339
USD/SGD
1.3362
0.0824
-0.5508
0.8757
USD/CAD
1.2321
0.0731
-0.1378
6.0783
Bond markets
Close
Change 1 day
Change 5 days
Change YTD
2-year German Govt Bond yield
-0.1890
0.0150
-0.0040
-0.0910
10-year German Govt Bond yield
0.8840
0.1320
0.0590
0.3430
Yield curve Germany
1.0730
0.1170
0.0630
0.4340
2-year US Treasury Bond yield
0.6575
0.0406
-0.0440
-0.0070
10-year US Treasury Bond yield
2.3743
0.1166
0.0184
0.2031
Yield curve US
1.7168
0.0760
0.0624
0.2101
US 2-year sw ap rate
0.9108
0.0108
-0.0414
0.0165
US 10-year sw ap rate
2.4551
0.0193
0.0469
0.1690
US sw ap curve
1.5443
0.0085
0.0883
0.1525
EU 2-year sw ap rate
0.1315
-0.0010
-0.0285
-0.0435
EU 10-year sw ap rate
1.2360
-0.0002
0.0797
0.4240
EU sw ap curve Euribor 3 Month ACT/360 ICE LIBOR USD 3 Month
1.1045
0.0008
0.1082
0.4675
-0.0140
0.0000
0.0000
-0.0920
0.2813
0.0005
-0.0048
0.0257
JPMorgan EMBI Plus Sovereign S
393.8700
3.8200
4.2900
6.4300
Equity markets
Close
Change 1 day % Change 5 days %Change YTD%
Nikkei 225
20,428
1.26
Hang Seng Index
27,081
Hang Seng China Enterprises Index
13,384
Australian Stock Exchange S&P/ASX 200 Index
5,610
0.24
1.29
3.68
Singapore Straits Times Index
3,315
0.43
-0.24
-1.49
Euro Stoxx 50 Index
3,596
4.06
4.60
14.29
S&P 500 Index
2,123
0.61
1.84
3.11
MSCI World Daily Total Return Gross USD
806
-0.32
0.21
4.97
AEX Index
490
3.01
3.56
15.37
-9.38
-17.80
-34.11
Chicago Board Options Exchange Volatility Index
Commodity markets Reuters/Jefferies CRB Total Return
13
Close
0.20
17.06
1.20
0.82
14.72
1.50
-1.76
11.67
Change 1 day % Change 5 days %Change YTD%
223
-0.89
-0.19
-3.40
1,186
-1.21
-0.06
0.07
Generic first NYMEX Crude Light future
60
0.12
0.27
12.03
Generic first Brent Crude Oil future
63
0.35
1.01
10.31
5,654
-0.09
-2.77
-10.25
501
2.61
2.45
-15.01
Gold spot USD/Oz
LME Copper 3 Months Rolling Forw ard Generic first Wheat future Chicago Board of Trade Source Bloomberg
3
Greece deal this week – 23 June 2015
Day
Date
Time
Country
Key Economic Indicators and Events
Monday Monday
6/22/2015 6/22/2015
16:00:00 19:00:00
US EC
Existing home sales - % mom Euro area leaders hold emergency meeting on Greece
Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday
6/23/2015 6/23/2015 6/23/2015 6/23/2015 6/23/2015 6/23/2015 6/23/2015 6/23/2015 6/23/2015 6/23/2015 6/23/2015
03:45:00 08:45:00 10:00:00 10:00:00 10:00:00 13:00:00 14:00:00 14:30:00 15:00:00 15:45:00 16:00:00
CN FR EC EC EC TR HU US US US US
PMI manufacturing - index (HSBC) - flash Business confidence manuf. - index PMI services - index Composite PMI output PMI manufacturing - index Repo rate - % Base rate -% New durable goods orders - % mom FHFA house price index - % mom Markit - Flash PMI New homes sold - % mom
Wednesday Wednesday Wednesday Wednesday
6/24/2015 6/24/2015 6/24/2015 6/24/2015
09:30:00 10:00:00 14:30:00 18:00:00
NL DE US FR
Producer confidence manufacturing - index Ifo - business climate - index GDP - % qoq annualised Total jobseekers - thousands
Thursday Thursday Thursday Thursday
6/25/2015 6/25/2015 6/25/2015 6/25/2015
13:00:00 14:30:00 14:30:00 14:30:00
CZ US US US
Repo rate - % Initial jobless claims - thousands PCE deflator core - % mom PCE deflator core - % yoy
Friday Friday Friday Friday
6/26/2015 6/26/2015 6/26/2015 6/26/2015
01:30:00 01:30:00 10:00:00 16:00:00
JP JP EC US
CPI - % yoy Unemployment - % M3 growth - % yoy Univ. of Michigan cons. confidence - index
Period
Latest outcome
Consensus
ABN AMRO
May
-3.0
4.2
4.8
Jun P Jun Jun P Jun P Jun P Jun-23 Jun-23 May Apr Jun P May
49.2 103.0 53.8 53.6 52.2 7.5 1.65 -1.0 0.3 54.0 7.0
49.4 102.0 53.7 53.6 52.2 7.5 1.50 -0.7 0.5 54.2 -0.7
53.9 53.8 52.4 7.5 1.50 -0.3 0.5 54.0 -0.5
Jun Jun 1Q T May
4.0 108.5 -1.0 26.0
108.1 -0.2
Jun-25 Jun-20 May May
0.05 267.0 0.0 1.0
0.05
May May May Jun F
1.0 3.0 5.0 95.0
0.4 3.3 5.4 94.6
3.8 108.0
0.05
0.1 1.2
5.5 96.0
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)
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