After a bad start to the day, the single currency rebounded against almost all of its major peers on Wednesday following reports that the Greek government and its creditors have started drafting a “staff-level” agreement. This boosted hopes that a final agreement on a ‘cash for reforms’ deal is growing closer. In fact, the government expressed confidence that it would make the €305m payment to the International Monetary Fund (IMF) due on 5th June, and bond markets sighed momentarily as 10-year Greek bond yields declined from 11.89% to 11.53%.
While this may provide investors a level of comfort in the short term, no long-term arrangement about the indebted nation has been reached. Several much larger payments still loom heavy on the horizon, including a further €1.3bn to the IMF in June. Are these agreements only delaying the inevitable.
Today we have the release of a raft of May sentiment indexes for the Eurozone for business climate, consumers, economic and industrial. Expectations are for them to be holding steady.