2 mins to read

While you were sleeping: Doubt rises as Greek aid talks continue

Stocks have sold off and bonds have gained on doubts the 17 EU nations will be able to bridge their differences.

Wed, 11 Jul 2018

The meeting of European Union finance ministers on extending aid to Greece has not resolved and yet stocks have sold off and bonds have gained on doubts the 17 nations will be able to bridge their differences.

German bonds rose for the first time in six days and the euro declined against the yen as finance chiefs met in Brussels, the third such meeting in a month. They failed to thrash out an agreement in an all-night session last week.

US Treasuries rose for the first time in five days, pushing the 10-year bond yield down 5 basis points to 1.64%.

"Today is critical in terms of reaching the agreement, which is not very much expected," Vassili Serebriakov, a currency strategist at BNP Paribas SA in New York, told Bloomberg.

Overdue for payment is some 44 billion euros that was originally due to be paid in May and Greece has since been surviving on emergency loans.

EU economic and monetary affairs commissioner Ollie Rehn urged the EU states and the International Monetary Fund to "go the last centimetre because we are so close to an agreement".

Stocks were weaker in Europe and the US. Germany's DAX 30 fell 0.2% and France's CAC 40 was down 0.8%.

On Wall Street the Dow Jones Industrial Average was recently down 0.5%. Macy's Inc was among decliners, falling 3.6% as retailers extended Black Friday discounting.

Thanksgiving weekend sales rise 13% to $US59.1 billion, according to the National Retail Federation. That is shy of the 16% gain in the same period last year.

The other leg of this week's double is the resumption of talks between President Barack Obama and Republicans on the US fiscal cliff.

Congress is seeking a budget deal to avoid $US607 billion of automatic tax increases and spending cuts from kicking in on January 1, just 36 days away. Failure to act could drive the world's biggest economy back into recession and result in a spiralling jobless rate.

Talks over Greece and the fiscal cliff are "just enough reason at this point in time to take risk off the table and wait for more insight and clarity", Peter Sorrentino of Huntington Asset Advisors in Cincinnati told Bloomberg.

The British pound found strength in the surprise announcement that Bank of Canada chief Mark Carney has been tapped for the top job at the Bank of England.

"I think the markets will interpret this as perhaps ushering in a rather tighter monetary stance from the Bank of England," Stephen Lewis, an analyst at Monument Securities, told Reuters.

The pound strengthened to rose to $1.6016 against the dollar after Mr Carney's appointment was announced, from about $1.6003.

In other appointments, Elisse Walter, former senior executive vice-president at the US Financial Industry Regulatory Authority, has been named as next chairman of the US Securities and Exchange Commission as incumbent Mary Schapiro is to step down on December 14 after being at the helm since 2009.

Ms Schapiro climbed into a hornet's nest as it faced fallout from the Bernard Madoff fraud and for its oversight of Lehman Brothers.

Meanwhile, New York City mayor Michael Bloomberg is seeking $US9.8 billion in federal funds to help pay for repairs from damage caused by Hurricane Sandy, whose total costs run to $US19 billion.

And Egyptian President Mohamed Mursi has been in talks with senior judges after violent protests over his move to increase his powers in the Middle Eastern nation.


© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
While you were sleeping: Doubt rises as Greek aid talks continue