Let’s Make a Deal

Weekly Report - 20/07/2015

Last Week

The prior week was lauded as a dealmaker’s heyday culminating in the formation of a nuclear accord and Greek understanding. Although obstacles to closure remain, the progress has generally been regarded as heading in an optimistic direction despite the risks.

The Week Ahead

Continued Greek wrangling defined the early part of last week’s market momentum before the Greek and other regional parliaments approved the latest measures that pave the way towards bridge financing and a third bailout package. Although complications remain ahead of full implementation, the air is cautiously optimistic as policymakers discuss potential debt relief and the structure of a new bailout package. In China, despite figures that showed annualized GDP expanding at 7.00%, investors are increasingly concerned by the volatility in equity markets as large swings coupled with a large amount of tradeable instruments halted, begs the question of the real state of the economy. Analysts are increasingly concerned by the veracity of the economic data purported by the nation as growth looks set to continue falling in spite of the proliferation of extremely accommodative monetary and fiscal policy measures. In remarks prepared for her semiannual testimony to Congress, Federal Reserve Chair Janet Yellen highlighted the gradual pace of tightening expected by the Central Bank as conditions improve and the outlook sees two rate hikes before the end of the year. Lastly, Iran and world powers managed to arrive at an accord that sets the stage for improved trade relations and an understanding that enables Iran to peacefully develop nuclear capacities.


Today will be a critical time for the Greeks as they are required to furnish a crucial repayment of EUR 3.5 billion to the European Central Bank. Failure to pay will result in a default that could have a resounding impact on the future of Europe. The coming sessions are marked by more limited economic data than typical, owing to the more quiet summer months. The major upcoming announcements are mainly limited to the larger global economies, with the United States set to report on existing home sales and new homes sales. Expectations are for existing home sales to rise approximately 0.90% month over month to 5.40 million existing homes sold in June which new home sales are forecast to fall ever so slightly to 543,000 sold. New Zealand is set to report on interest rates, with the Reserve Bank of New Zealand forecast to keep rates on hold at 3.25% despite the marked possibility that the Central Bank will surprise markets with a 25 basis point cut following similar moves by the Bank of Canada. Other important data includes manufacturing figures from the aggregate Euro Area and constituents France and Germany coupled with similar reports from China and the United States.


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