Epic Uncertainty: Markets React to Greek Debt Crisis

Posted by Laura Sarlo, Senior Sovereign Analyst on Jun 30, 2015 5:07:00 PM

By Laura Sarlo, Senior Sovereign Analyst, Aimee Kaye, Sovereign Analyst and Marianne Winkleman, Director of Global Bond, EM and FX Trading

Sarlo-Greece-11-20-14It's a tense standoff between Greece and its international creditors. Unless both sides dramatically return to the negotiating table, Greece looks set to default on its €1.5 billion International Monetary Fund (IMF) loan payment on June 30. While European Union (EU) leaders are still trying to coax Prime Minister Alexis Tsipras back to the table (though they have made no new concessions), the Greek hard-line stance appears increasingly entrenched, regardless of the potential consequences.

Greek government bond trading has virtually ground to a halt, with electronic trading platforms temporarily suspending trading.  The players are few and far between.  The markets have been raising odds of an exit, but it is still not the base case.  The level of uncertainty is dizzying; there are too many questions and too many potential outcomes for the markets to think clearly.  Liquidity in Italy and Spain has deteriorated, as evident by the price action.  However, yields and spreads have been relatively contained.  There has been very little real contagion.  Even the euro has been desensitized.  Yet the markets remain cautious.  We could be on the verge of receiving a third bailout program, which could give Greece and the markets some time.  It won't be smooth.  But even stable uncertainty would be a welcome change to all the noise. 




This blog post is provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of Loomis, Sayles & Company, L.P. This information is subject to change at any time without notice.

Topics: Macro Strategies, Sovereign Research

Loomis Sayles analysts are career professionals who offer deep knowledge and experience in a diversity of global asset classes and market sectors. These dedicated experts provide the insight essential to supporting our portfolio management teams across a wide range of investment strategies.


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