EmailThe on again-off again solution for the Greek debt crisis is off again this morning, as EU finance ministers have said Greece must pass new austerity measures first to receive the funding it needs to make impending debt payments. That political tact has thrown into question whether Greek politicians will have the resolve to do just that given the social unrest that is building in Athens.
The market has been weighed down by the renewed sense of uncertainty on this matter, which is complicated further by the understanding that Greece's prime minister is slated to face a no confidence vote on Tuesday.
That vote and the dealings of the Greek parliament will set the stage for meetings later in the week (June 23 and 24) among EU leaders to discuss a second bailout package and steps reportedly to shore up the European Financial Stability Facility.
S&P futures at the moment are trading 0.4% below fair value while the risky nature of dealings surrounding Greece have underpinned the Treasury market. The 10-year Note is up 7 ticks, lowering its yield to 2.92%.
This week promises to have its share of drama and not just because of Greece. The FOMC will convene on Tuesday and Wednesday to discuss monetary policy. That meeting will culminate with the release of the policy directive and a subsequent press conference held by Fed Chairman Bernanke.
Market participants are expecting the Fed to downgrade its economic growth projections and are anxiously awaiting to see if the Fed's language in its directive changes at all knowing QE2 is set to end on June 30. There is a burgeoning belief that the Fed will find a new way to communicate that interest rates will stay down longer than is already expected.
Either way, this FOMC meeting has added importance given its timing in relation to the Greek situation, the unsettled debate in the U.S. on raising the debt ceiling, and the soft economic data of late.
There aren't any economic releases of note today. Existing Home Sales for May will be released tomorrow and will be followed later in the week by the Initial Claims, New Home Sales, Q1 GDP (Third Estimate), and Durable Orders reports.
Corporate news is also on the light side. PNC Financial Services (PNC) has made a $3.45 bln offer to acquire the Royal Bank of Canada's U.S. retail bank for $3.45 bln. This news, however, is not having any broad impact, as the macro scene continues to hold sway over the unsettled market.
--Patrick J. O'Hare, Briefing.com
Patrick J. O'Hare is the Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial please email researchsales@briefing.com.
