Developments surrounding Greece continues to be market moving and ever changing. Yesterday evening, Greece submitted a new proposal that appears to be a material change in its stance and goes some way to bridging the gap with what its creditors are looking for and what Greece originally offered. The new proposal includes measures on the contentious area of pensions and includes new tax increases whilst outlining cuts in spending. Eurogroup Chair Jeroen Dijsselbloem told reporters that on first impressions the new Greek proposal was “broad and comprehensive”. It is hoped that an agreement can be met on Thursday morning, as a result Athens index surged 9% overnight.
However, this is far from a done deal and there are still plenty of hurdles that need to be overcome. Not only will creditors and the IMF need to sign off the deal but internal support will still be required within Greece. The Greek PM will first attempt to obtain approval from the SYRIZA party's 200-strong Central Committee before bringing the agreement to parliament. In the event of failure at the party level, it is likely that a referendum would unfold.
Meanwhile, as far as scheduled economic releases go, the only major piece of data was the US existing homes sales. This number was positive for the US as it exceeded forecasts and last month’s figure was revised higher. The market will be scrutinising data from the US moving forward in order to decipher the likelihood of a Fed rate hike in September.
The tone of the day will be dependent on whether there will be any further development surrounding Greece. Apart from that, data today from both Europe and the US will give a good indication of economic activity. Following last week’s FOMC meeting, there will be close attention on US data to see whether September is a viable time for “lift off” in rates.