ECB is expected to hike interest rate during today’s meeting, as analysts agree after the last ECB Press Conference where Trichet signaled the market by using the code word “strong vigilance”. Trichet repeat the same code words once again last week, confirming to the market of ECB’s resolve on hiking rates, erasing any doubts that by Friday, ECB’s temporary short-term rate will be at 1.50%.
Greece
Today’s market suffered heavy risk aversion sell offs as Germany said that the aid package for Greece is “not yet a done deal”, plus ratings downgrade of both Greece and Portugal’s sovereign credit worthiness, created the perfect storm that we haven’t seen for quite a while…
The heart of the matter is simple, and it could be summarized up in just one word: “Elections”… As German politicians campaign for re-elections, aid for Greece became a political tool used to sway public opinion…
Greece got a 45 Billion Euro rescue package at 5% interest rate, which is below the 6.98% rate. As reported in the Bloomberg Article, managing director of BlueGold Capital Management LLP in London said”
“This is a huge amount,” “This is more than a bazooka. They have gone nuclear on the issue of Greece. In the short run the market is short Greek assets so we’ll get a rally in those.”
For more on the article from Bloomberg, click here
