Quick thoughts on Greece: don’t trust unnamed EU officials

<p>The markets had a 2 minute bout of volatility at approx. 1120am, apparently EU officials said two contradictory things, one said that Greece’s latest reform […]</p>

The markets had a 2 minute bout of volatility at approx. 1120am, apparently EU officials said two contradictory things, one said that Greece’s latest reform package could be the basis for a deal with its creditors, literally two minutes later another unnamed EU official said that the terms had been rejected.

It looks like the truth lies somewhere between the two – the latest headlines suggest that some of the proposals have been accepted. Although it looks like the Greek’s have packed up and are unwilling to do anymore, another official, this time a Greek one, said that the Greek government has shown deal- willingness – does this mean that the creditor’s haven’t? At this stage a deal doesn’t look likely, but 5 minutes can be a long time in Brussels…

I wonder what Socrates would make of this nonsence, rather than a Greek tragedy this becoming a parlour-room farce.

The deadline for a deal was meant to be 1000 London time, but as we know, these deadlines are like a movable feast. So, even if we don’t get an absolute breakthrough in the coming hours, we could see things get pushed out to Friday or even the weekend. The EU officials (named and unnamed) don’t seem to mind that any “deal” would still need to get through the Greek parliament, which could delay things further,  especiallty as reports suggest that other Syriza party members won’t support the terms of Tsipras’s latest reform package.

We expect these headlines to keep coming thick and fast over the next 24 hours, the latest is that a deal hasn’t been reached…  We aren’t hopeful that there will be a clean-cut resolution any time soon. In our view, the ECB holds the trump card, if it cuts off Greek banks from ELA financing then it could be game over for Athens.

In terms of the market response we never even broke today’s high or low in EURUSD on the back of the contradictory statements about a deal.   In our view EUR could be driven more by US data due later today. European stocks have backed off their highs, but are still holding up considering the confusion emanating from Brussels.

 

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