Equity markets across Europe reversed direction today as the ongoing search for a viable Greek deal was perhaps more elusive than investors had anticipated. After heady gains on both Monday and Tuesday, eurozone indices pared lower as creditors raised concerns regarding Greece’s proposals. Eurozone ministers flew into Brussels for an emergency meeting in an attempt to patch up Monday’s proposal after officials reviewing the plan stated that some reforms were inadequate. With time quickly running out even if a new deal can be agreed upon questions still remain as to whether there will be enough time to asses all aspects of it ahead of a scheduled €1.5bn loan repayment to the IMF on June 30th.
Given the four months of stalemate between Athens and its creditors, the likelihood of a fresh deal being proposed and then implemented with little or no resistance at this late stage is, as we can see, very slim indeed. Accordingly, once optimistic investors have returned en masse to safe haven assets with yields on 10 year German bunds pulling back towards 0.820% after spiking higher on Monday, towards 0.893% as investors rotated out of bonds and into equity markets.