Daily Insight ECB restricts ELA to Greek banks
Group Economics Macro & Financial Markets Research
Nick Kounis +31 20 343 5616
7 July 2015 • • • •
ECB raises ELA haircuts for Greek banks –liquidity to evaporate within days Subdued market reaction after referendum underlines that Greece is not another Lehman Stepping down of Greek finance minister may help a deal, but is not a game changer Eurogroup seems open for talks, but on its terms – Greece would need to make concessions
ECB restricts ELA for Greek banks
Varoufexit may help a deal…
On Monday evening, the ECB’s Governing Council decided to
One of the mottos of the current Greek debt crisis should be:
restrict ELA for Greek banks. Although it left the limit for ELA
‘prepare to be surprised’. There was a new twist on Monday
unchanged, it increased the haircut on the collateral used to
morning, when Greek Finance Minister Yanis Varoufakis
access the liquidity, reflecting the referendum result and the
resigned. He said that the Eurogroup had problems with him
increased risk of Greek sovereign default. It is unclear exactly
and Prime Minister Tsipras felt it would be better for the
by how much the haircut was raised. Some Greek banking
prospects for a deal if he stepped down. He will be replaced by
officials were reported to have played it down, saying it was
Euclid Tsakalotos, previously Deputy Minister for International
only a modest change in the haircut. However, the Greek
Economic Relations and lead negotiator in Greece’s talks with
banks cannot afford any kind of restriction. The Greek
the institutions. Mr. Tsakalotos’ background is an economics
authorities have admitted that the banking sector continues to
professor.
face acute liquidity problems despite the deposit controls. Even on the previous ELA regime, the Greek banks were projected
…but not a game changer
to run seriously short of liquidity by Friday. So the haircut will
The new finance minister is seen as being less confrontational
bring that even closer.
than Mr. Varoufakis and his appointment is positive for a deal. However, it is not a game changer. The barriers to a deal
Investors not phased by Greek NO The Greek public overwhelming rejects creditor proposal, triggering a sharp rise in Greek default and euro exit risks. What happens next? A few years ago the smart money would
remain and the new finance minister will not take a different view to the PM. In addition, the ‘trust issue’ for the Eurogroup is also with PM Tsipras.
have been on an aggressive sell-off in financial markets and a major deterioration in investor sentiment. But this is not 2010-
Eurogroup and EU Summit Tuesday
2012. The reaction of financial markets on Monday was
Most Eurogroup finance ministers reacted with balanced
relatively subdued. European equities were generally down by
comments to the referendum result. They are willing to talk to
less than 2%, Bund yields edged down only modestly, while
Greece, but they also signalled that Greece would need to
peripheral government bond yields were up by 10-20bp. The
make the concessions. The Greek government is looking for
euro weakened, but did not slump.
upfront debt relief, but most eurozone finance ministers will only consider debt restructuring if Greece delivered the
Not a Lehman moment
measures in a programme. In addition, the starting point was
This is in line with our view that Greek crisis escalation and
not the old programme, which has expired, but Greece would
possible eventual euro exit does not represent Europe’s
need to apply for a new ESM programme.
Lehman moment. Exposures of the eurozone banking system to Greece are modest and relatively transparent. At the same time, we do not think other eurozone member states are in a similar situation to Greece and ready to follow in its footsteps. Finally, the ECB would react with force in the case that market tensions escalated. It could activate the OMT. To qualify for the OMT, member states need to be in an ESM programme. However, this includes a precautionary credit line, which has very limited conditions.
We will find out more about the prospects for any new deal at the European meetings on Tuesday. There is a Eurogroup (at 13:00 CET) followed by a Euro Summit (18:00).
2
ECB restricts ELA to Greek banks – 7 July 2015
Financial markets Currency markets
Close
Change 1 day
1.1060 122.54
0.0000
0.3439
2.2530
AUD/USD
0.7500
-0.2262
-2.7111
-8.1445
USD/CHF
0.9424
0.0318
0.7699
-5.1816
NZD/USD
0.6685
-0.2090
-1.2993
-14.2399
GBP/USD
1.5605
-0.1024
-0.7631
0.1540
USD/SGD
1.3485
0.0223
0.0816
1.8043
Bond markets
1.2650
Close
0.1980
Change 1 day
-0.8339
Change YTD
EUR/USD USD/JPY
USD/CAD
-0.1354
Change 5 days
1.3378
Change 5 days
-8.5950
8.9109
Change YTD
2-year German Govt Bond yield
-0.2490
0.0050
-0.0350
-0.1510
10-year German Govt Bond yield
0.7640
-0.0270
-0.0320
0.2230
Yield curve Germany
1.0130
-0.0320
0.0030
0.3740
2-year US Treasury Bond yield
0.5892
-0.0378
-0.0437
-0.0753
10-year US Treasury Bond yield
2.2886
-0.0937
-0.0356
0.1174
Yield curve US
1.6994
-0.0559
0.0081
0.1927
US 2-year sw ap rate
0.8573
-0.0050
-0.0306
-0.0370
US 10-year sw ap rate
2.4100
-0.0250
-0.0177
0.1239
US sw ap curve
1.5527
-0.0200
0.0129
0.1609
EU 2-year sw ap rate
0.1250
0.0010
0.0030
-0.0500
EU 10-year sw ap rate
1.1650
0.0004
0.0170
0.3530
EU sw ap curve
1.0400
-0.0006
0.0140
0.4030
-0.0160
-0.0010
0.0000
-0.0940
0.2843
0.0008
0.0026
0.0287
-0.6400
3.2100
-3.0300
Euribor 3 Month ACT/360 ICE LIBOR USD 3 Month JPMorgan EMBI Plus Sovereign S
384.4100
Equity markets
Close
Change 1 day % Change 5 days %Change YTD%
Nikkei 225
20,112
-2.08
0.01
15.25
Hang Seng Index
25,236
-3.18
-5.35
6.91
Hang Seng China Enterprises Index
12,231
-2.99
-6.55
2.06
Australian Stock Exchange S&P/ASX 200 Index
5,475
-1.14
0.97
1.18
Singapore Straits Times Index
3,333
-0.29
1.61
-0.96
Euro Stoxx 50 Index
3,365
-2.22
-2.99
6.95
S&P 500 Index
2,069
-0.39
-1.56
0.48
MSCI World Daily Total Return Gross USD
794
-0.22
-1.72
3.38
AEX Index
467
-1.45
-2.07
10.08
1.31
21.33
-11.41
Chicago Board Options Exchange Volatility Index
Commodity markets Reuters/Jefferies CRB Total Return Gold spot USD/Oz Generic first NYMEX Crude Light future Generic first Brent Crude Oil future LME Copper 3 Months Rolling Forw ard Generic first Wheat future Chicago Board of Trade Source Bloomberg
17
Close
Change 1 day % Change 5 days %Change YTD%
225
0.22
-0.15
-2.34
1,170
0.13
-0.84
-1.26
53
-7.27
-11.47
-0.90
57
-5.84
-8.40
-0.92
5,590
-2.93
-3.45
-11.27
596
0.85
5.91
0.97
3
ECB restricts ELA to Greek banks – 7 July 2015
Day
Date
Time
Country
Monday Monday Monday
06/07/2015 06/07/2015 06/07/2015
08:00:00 15:45:00 16:00:00
DE EC US
Tuesday Tuesday Tuesday Tuesday
07/07/2015 07/07/2015 07/07/2015 07/07/2015
08:00:00 09:00:00 14:30:00 16:00:00
Wednesday Wednesday
08/07/2015 08/07/2015
Thursday Thursday Thursday Thursday Thursday Thursday Friday Friday Friday Friday
Key Economic Indicators and Events
Period
Latest outcome
Consensus
Manufacturing orders - % mom ECB announces weekly QE details ISM non-manufacturing, index
May
1.4
-0.1
Jun
55.7
56.3
DE CH US US
Industrial production - % mom Foreign currency reserves - CHF m ln Trade balance - USD bn US Job Openings by Industry
May Jun May May
0.9 517488 -40.9 5376
0.1
21:00:00
US PL
Fed Reserve consumer credit - USD bn Reference rate - %
May Jul 8
20.5 1.5
18.7 1.5
09/07/2015 09/07/2015 09/07/2015 09/07/2015 09/07/2015 09/07/2015
01:50:00 03:30:00 09:30:00 13:00:00 13:00:00
JP CN NL GB GB KR
Machinery orders private sector - % mom CPI - % yoy CPI - % yoy Policy rate - % BoE size of asset purchase programme - GBP bn Policy rate - %
May Jun Jun Jul 9 Jul Jul 9
3.8 1.2 1.1 0.5 375 1.50
-4.1 1.3 0.5 375 1.50
10/07/2015 10/07/2015 10/07/2015 10/07/2015
10:30:00 15/07/2015 15/07/2015 15/07/2015
GB CN CN CN
Trade balance - GDP mln M2 money growth - % yoy Aggregate Financing - CNY bn New loans - CNY bn
May Jun Jun Jun
-1202 10.8 1219.6 900.8
-2160 11.0 1400.0 1050.0
ABN AMRO
57.0
-42.0
375 1.50
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)
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