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July 6, 2015

Market Rundown July 6, 2015

Over the weekend the people of Greece voted ‘No’ to the EU bailout terms sending European markets down (The DAX fell 1.52% and EuroStoxx fell 2.22%). S&P500 futures were down as much as 33 points overnight but recovered to end down 0.15%. This confirms what I said last week – the markets don’t care too much about Greece.

Although the odds of a Greek exit from the Euro are rising, investors seem to be drowning out Greek headlines as noise in favor of US data. Unfortunately the Greek news reel won’t end soon as European policy makers try to find a solution for Greece this week with two debt repayments approach (the big deadline is the July 20th 3.5 billion ECB payment)

The biggest move in bonds came from Greece unsurprisingly with yields increasing 350 basis points (3.5%) in one session!! The reaction from peripheral bonds (ie. Italy and Spain) was decent demonstrating investors are not as worried about Greek risks spreading to the rest of Europe. US treasury yields were down with the 10 year falling 10 basis points mostly on Greece news. Again this reaction was relatively calm given the uncertainties created by the ‘No’ vote.

Overnight the Euro fell significantly against the US dollar on news of the Greek referendum results but recovered somewhat throughout the day. The Canadian dollar weakened against the US dollar mainly because of the weakness in oil.

In commodities the biggest move was in WTI oil down 7.7% on the day!! The move was huge and no one has a clear explanation on what drove it. Iran nuclear negations are going on, with the potential for a bunch of supply to hit the market but there’s probably another catalyst. We will get more color over the coming days.

Courtesy OtterWood Capital Management

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Item Reviewed: Market Rundown July 6, 2015 Rating: 5 Reviewed By: EconMatters