The news that Greece has requested a 2-year bailout programme from the ESM office has come as a surprise to the market after we spent most of the morning accepting that Greece was going to default, but that everything would be ok if it did.
This throws a cat amongst the pigeons and leaves a number of freshly unanswered questions:
Will the request be accepted? (Greece has also asked for debt restructuring, something that has not been allowed before).
Will Greece be able to pay the IMF? The Greek Fin Min has reiterated that they will not pay ahead of tonight’s deadline.
Will Sunday’s referendum go ahead?
What does this mean for Grexit fears?
This all adds up to even more uncertainty. The markets are taking the news gingerly, and there has been no positive impact from this event. The Dax is still higher on the day; however it has dropped back about 80 pips since the announcement. Is this the market setting itself up for the bailout request to be rejected and for Greece to go ahead and default later?
We shall have to wait and see, one thing is for sure – 8 hours is a long time in this Greek crisis, and who knows what may happen ahead of the IMF deadline this evening.
Markets are probably right to wait on the side-lines until we get something solid out of the European authorities. In the meantime this is a great opportunity for precious metals and other safe havens to show what they’re good for during a very uncertain crisis.
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