Back
10 Dec 2014
Markets may have already priced in the probable bad outcome for Greece – TDS
FXStreet (Barcelona) - Jacqui Douglas, Senior Global Strategist at TD Securities, notes that we are only a few steps away from a really bad scenario to be seen in Greece, which the markets have already priced in.
Key Quotes
“Greece is back on the market’s radar as it tries to exit its Troika program, and we think that the recent sell-off in Greek bonds and equities is probably overdone.”
“The recent flare-up stems from Greece bringing forward its presidential elections, which weren’t due until the end of Feb.”
“The market reaction comes from the fear that snap elections would result in a Syriza-led government, as Syriza is currently leading New Democracy in the polls. Syriza has backed away from prior talk about leaving the euro, although it does still want to renege on Troika debt.”
“The good news is that even in a worst-case scenario of a Syriza government, the risk of contagion to the rest of the Eurozone is much smaller than it was at the time of the last Greek elections in June 2012, which was the peak of the Eurozone crisis.”
“There is still a reasonable chance that Samaras’ government is able to elect its choice of President, which would result in an extended period of political certainty. There is also a reasonable chance that in the case of snap elections, Samaras is able to get re-elected. So we’re still a few bad outcomes away from the really bad scenario that markets have already priced in.”
Key Quotes
“Greece is back on the market’s radar as it tries to exit its Troika program, and we think that the recent sell-off in Greek bonds and equities is probably overdone.”
“The recent flare-up stems from Greece bringing forward its presidential elections, which weren’t due until the end of Feb.”
“The market reaction comes from the fear that snap elections would result in a Syriza-led government, as Syriza is currently leading New Democracy in the polls. Syriza has backed away from prior talk about leaving the euro, although it does still want to renege on Troika debt.”
“The good news is that even in a worst-case scenario of a Syriza government, the risk of contagion to the rest of the Eurozone is much smaller than it was at the time of the last Greek elections in June 2012, which was the peak of the Eurozone crisis.”
“There is still a reasonable chance that Samaras’ government is able to elect its choice of President, which would result in an extended period of political certainty. There is also a reasonable chance that in the case of snap elections, Samaras is able to get re-elected. So we’re still a few bad outcomes away from the really bad scenario that markets have already priced in.”