Greek drama continued yesterday, we saw another decent piece of US data and the Chinese economy bounced back once again.
Firstly, the Greek saga continued as a deal still doesn’t look set in stone. The Eurogroup met in Brussels yesterday in hopes of finally sealing a Greek aid deal. In a statement, the Greek government said that creditors haven’t accepted the proposals that Greece made earlier this week. Comments from key officials sound like it is going to take a big effort from Greece to get this over the line. Germany’s Finance Ministry spokesman stated that “our impression is that there’s still a long way to go.” He went on to say that creditors had been “exceptionally generous” and that “it’s now up to the Greek side to show some movement”. Meanwhile, IMF Managing Director Christine Lagarde said that “one can’t build a programme on the sole promise of better tax collection – as we have heard for the past five years, and with very little results”. Discussion continued into the early hours and will resume today. Time is running out for Greece with just days until the deadline, market volatility is expected to continue until this uncertainty clears.
The world’s largest economy shrank less in the first quarter than previously estimated as consumer spending gains helped boost the economy. GDP in the US declined at a 0.2% annualised rate, revised from a previously reported -0.7%, matching the economists consensus. Again, the harsh winter weather of Q1 that slowed growth has finally given way and increases in consumer spending and housing are rescuing the economy and bolstering the Federal Reserve’s predictions that the early year setback was only temporary. September is still the favoured date in the market for lift off in rates with estimations between 50-100 basis points over the next year.
Fairly quiet on today’s economic docket, but the spotlight will remain on Greece for any further developments. However, there will be focus on the US data following last week’s FOMC meeting. This afternoon we have the release of US unemployment claims and persona spending with both figures expected to increase.