(EU) Optimistic markets rallied higher after Greece pro-austerity New Democracy party won the parliament Greek elections, they are expected to create a coalition by Wednesday and secure 179 of the 300 seats. Note the Greek parliament released official election results putting the ND party at 29.7% of the votes (129 seats), and the Syriza party at 26.9% votes (71 seats). The winning wining party is awarded extra 50-seat bonus in the parliament, making the ND party the majority with 179 seats).
Following the Greek elections, an article by the Telegraph’s Evans-Pritchard commented that Greece will eventually have to leave the EMU regardless of the results. He questioned the ability of Greek officials to meet the harsh terms of their bailout package. The issue now is how a Greek exit will be negotiated.
(GR) German Govt spokesperson: Chancellor Merkel has assumed Greece will continue with its bailout commitments and now is NOT the time for giving discounts to Greece- EU/IMF/ECB Trioka to visit Athens and check its current status to assess next payout – Expects Troika to return to Greece in early July.
(EU) Dealers focused on Spain after weekend press report circulated that Spain PM Rajoy would not implement IMF’s latest recommendations that included cuts in govt worker wages because they were non-binding. Additionally, Spain Apr bad loan ratio hits its highest level since Apr 1994 at 8.72%. The Spanish 5-year and 10-year yields and spread against the German bund blew out to fresh EMU record levels above the 7% threshold.
How to interpret these headlines?
Market sentiment in Europe has improved dramatically this past couple of weeks as Spain is scheduled to request for a banking bailout totaling $125B and Greece gets to stay in the Euro Zone, narrowly avoided the doom and gloom scenario with the potential of an EU collapse. Some analysts may argue that the European crisis is still on, but they will have to admit that situation has improved significantly since last week.
Therefore, moving forward, I’d be looking for potential EURO long trades based on 3 important reasons:
Obviously I’d recommend to wait for pullbacks before taking the trade.
What Happen After Greek Elections?
June 18, 2012 by 6 Comments