We have a ‘deal’

So having pulled an all-nighter, Europe reached a ‘unanimous’ agreement on Greece.

Source: Bloomberg

A third bailout ELA program is now being readied. The €82 to €86 billion ELA will be distributed over three years with the first disbursement to be finalised by the end of the week on the deal being approved by all governments.

The second and third disbursements are subject to Greece delivering on its commitments by the conclusion of the first review of the ESM programme come 30 September – Debt relief is on a very tight leash.

What has been agreed to in Brussels (not passed in Athens)

  • Streamlining VAT and broadening of the tax base to increase revenue
  • Upfront reform measure to pension schemes
  • Long-term sustainability of the pension scheme
  • Implementation of the provision of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union.

These measures are due by Wednesday (15 July)

  • Streamlining legal practices through Code of Civil Procedure – cost reduction measure
  • Strengthen financial sector including ‘decisive’ action on non-performing loans and ‘eliminating’ any possibility of political interference.

These measures are due by 22 July

  • Greece has also been asked to scale-up its privatisation program with improved governments. From this, Greek assets will be transferred to an independent fund charged with generating a targeted €50 billion.


  • The revenue from said fund will be broken down in the following ways
    • €25 billion used to cover the recapitalisation of banks
    • €12.5 billion to repay sovereign debt
    • €12.5 billion to finance additional investment


  • The measures agreed upon are seen as more austere (sell-side analysts’ consensus) than the deal Greece rejected on 24 June and went to the people with – Prime Minster Tsipras’ capital appears spent.


  • Politically – consensus is that Prime Minister Tsipras will lose his majority and a unity government will be required. Approximately 72% of sell-side analysts see a new election inside the next 60 days.


  • Although this ‘deal’ reduces the risk of ‘Grexit’ in the interim it still remains a significant issue in the medium term. Greek politics could collapse under the strain of this new deal and the subsequent elections that may transpire. The viability of the program is also a large risk if the ‘reform’ process is disjointed or feeble or straight out rejected by new governments.


  • All this explains why European markets didn’t explode higher – the initial bounce in equities was only held through European session they didn’t move higher still. The deal has several very tough days and weeks ahead.


Ahead of the Australian open

We are currently calling the ASX 200 up 67 points to 5553 as European and US trade gives the ASX one of the most positive intra-day leads in weeks.

US earning session sees major banks reporting from tonight through to Friday, JP Morgan kicking it off followed by Wells Fargo, Bank of America, Citi, Goldman Sachs and Merrill Lynch – this will drive US trade and therefore the leads will filter into Asia and Australia.

Expectations around earnings are incredibly low due to the impact of the high USD. I therefore expect to see the ‘normal’ US earnings season beats occurring with approximately 65% of companies beating estimates on the revenue line and over 70% on the EPS line.

Iron ore held above US$50 a tonne and industrial metals as a whole bounce by 1% or more. China’s ‘stability’ mechanisms remain and should remain for a considerable period – it will shore up ‘confidence’ in the metal complex and Asian markets.

A positive of exporting sectors like materials – not so much for ‘free markets’.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.