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4 May 2015
Markets less pessimistic towards a Greek deal – BBH
FXStreet (Barcelona) - The Brown Brothers Harriman Team believe that the reaction in Greece’s financial markets will deter any ECB action in the non-monetary policy meeting this week when the central bank meets to discuss the ELA arrangement for the Greek banks.
Key Quotes
“The market has become less pessimistic toward a Greek deal. In the past seven sessions, the 10-year Greek yield has fallen by about 350 bp to a little less than 10.5%. The 3-year yield has fallen by 830 bp to about 22.3% over the past four sessions. Greek stocks have rallied 11.7% over the past five sessions.”
“At its non-monetary policy meeting this week, the ECB is expected to discuss the haircut given to Greek bonds, used by Greek banks as collateral for the ELA borrowings. The progress in the negotiations and the rally in Greek bonds will likely deter ECB action now."
“At the same time, however, there is risk that the market misreads a smaller ELA allotment. The ECB appears to be simply giving Greek banks the funds it needs to offset the drain of deposits and other factors. A smaller expansion in the ELA would actually be a positive development, indicated the stabilization of Greek banking system's needs.”
Key Quotes
“The market has become less pessimistic toward a Greek deal. In the past seven sessions, the 10-year Greek yield has fallen by about 350 bp to a little less than 10.5%. The 3-year yield has fallen by 830 bp to about 22.3% over the past four sessions. Greek stocks have rallied 11.7% over the past five sessions.”
“At its non-monetary policy meeting this week, the ECB is expected to discuss the haircut given to Greek bonds, used by Greek banks as collateral for the ELA borrowings. The progress in the negotiations and the rally in Greek bonds will likely deter ECB action now."
“At the same time, however, there is risk that the market misreads a smaller ELA allotment. The ECB appears to be simply giving Greek banks the funds it needs to offset the drain of deposits and other factors. A smaller expansion in the ELA would actually be a positive development, indicated the stabilization of Greek banking system's needs.”