This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

World Markets React to Greece Aid

By Win Thin of BBH FX Strategy

NEW YORK ( TheStreet) -- Markets have given a clear "thumbs down" to the Greek aid package. Greek two-year yields have surged 379 bp today to over 14%, and is dragging the rest of the periphery along.

Portugal two-year yield is up 67 bp, Ireland up 25 bp, Italy up 15 bp and Spain up 25 bp. Greek CDSs are trading near 730 bp, below the highs around 850 bp last week but clearly still elevated. In other words, the markets are telling us that the aid package has not lessened default risk by any significant amount. Remember, the entire Greek aid package is predicated on getting market borrowing rates back down so that Greece can issue new debt for the private sector and stay current on its current debt load. That's not happening yet.

The euro is making new lows for the cycle against the dollar, and concerns about Greece are helping to soften up EM currencies today as well. Not surprisingly, EMEA currencies are getting hit the hardest, with worst performers vs. USD today HUF, PLN, ZAR, CZK and RON. We remain most bearish on EMEA within the EM space, and most bullish on Asia.

Eastern Europe is highly dependent on exports to Western Europe and we see sub par euro zone growth continuing for several years. RON was probably not helped by a 25 bp cut today in the policy rate to 6.25%, a record low, while ZAR sentiment may have been hurt by report that unemployment rose to 25.2% in the first quarter from 24.3% previously. We think a rate cut is very likely at the next SARB meeting on May 13. Bottom line: EMEA is going to be saddled with a combination of slow growth and the need for stable to lower interest rates, while Asia is enjoying strong growth and a rising need for tighter monetary policy.
More on Europe's Debt Crisis
ETFs for a Broken Euro
A global leader with close to 200 years of experience, Brown Brothers Harriman helps many of the world's most sophisticated mutual funds, investment managers, banks and insurance companies achieve their international business objectives. BBH provides specialist services and innovative solutions to clients that include a global custody network of close to 100 markets, accounting, administration, securities lending, foreign exchange, cash management and brokerage services. BBH operates a global business through 14 locations, including New York, Boston, New Jersey, Philadelphia, Charlotte, Chicago, Dallas, London, Dublin, Luxembourg, Zurich, Grand Cayman, Hong Kong and Tokyo.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.18 1.64%
FB $117.43 -0.96%
GOOG $692.36 -0.84%
TSLA $232.32 -3.92%
YHOO $36.01 -1.42%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs