Eurozone stocks continued to trade under pressure as nervous investors continue to monitor the situation between Greece and its creditors. High hopes for a deal saw 10 year German bund yields stabilise around 0.852% after swinging widely either side in a 65bp move as the most recent developments are yet to signal a deal has been reached. While the prospects of a Greek deal would see investors – who have for the most part remained on the side-lines adopting a wait and see approach – welcome an agreement of terms that would see Athens commit to driving down the deficit and structurally reforming the pension and labour market, critics argue that we are already past any real hopes of meeting the fast approaching June 30th IMF debt repayment deadline. Eurozone officials had been quite adamant on the fact that this was a deadline that couldn’t under any circumstances be missed, but with the number of meeting taking place across the continent and each offering hopes of a deal before quickly dashing them we argue that even if a final agreement can be reached this would merely kick the can down the road and buy negotiators more time.
For now though the general market sentiment seems to be mostly positive with investment demand for gold falling further as haven demand wanes. Spot prices are on track to close lower for the fifth straight session today, trading towards $1,170/oz at the time of writing. We expect tomorrow’s trading session to see further jittery trading as market volatility increases, with investors largely choosing to disregard any fundamental economic data as all eyes are firmly on the tug of war between Athens and its eurozone creditors with the hopes of at least some progress before the weekend, capping off a very choppy, yet dull week for investors.