Greek bonds rally as PM says bailout breakthrough is close

Graeme Wearden (until 2.45) and Nick Fletcher

from on 2015-04-28 16:31 (#7ZDJ)

All the latest economic and financial news, including reaction to Alexis Tsipras's late-night interview

5.31pm BST

Mixed company results, uncertainty ahead of the UK general election and - more immediately - the latest comments from the US Federal Reserve on interest rates due on Wednesday combined to send shares sharply lower. So despite some optimism that Greece could resolve its financial crisis, now its negotiating team has been restructured, investors remained cautious. The final scores showed:

5.11pm BST

Hopes that a deal between Greece and its creditors can be done before the country runs out of cash continue to support the country's bonds:

Greece 10Y benchmark bond mid-yield: 10.83%; Spread v. 10Y German bund 1066.50; -73.50 bps from prev close #EUGV

5.09pm BST

Here's our story on the Iranian ship situation:

4.21pm BST

And it now appears the ship supposedly seized by Iran was not American after all:

Update: RTRS citing Pentagon spokesperson says detained ship was Maersk Tigris cargo vessel flying under Marshall Islands flag

3.57pm BST

Back with Greece and the head of the Eurogroup has said that the shake-up of Greece's negotiating team would not by itself resolve the impasse between the country and its creditors, and it would still need new loans. Jeroen Dijsselbloem said:

Without further loans, Greece won't make it, that's the reality.

Dijsselbloem said in a television interview it may be of some help that the Greeks have appointed a single contact person for negotiations, with Greek Finance Minister Yanis Varoufakis apparently sidelined.

But he said there had been little progress in negotiations over the past two months, and signalled he did not think a Greek referendum on a deal with creditors would be a good idea. Tsipras has said he may submit an eventual deal to the Greek people for approval if its terms are contrary to the platform he campaigned on.

The Dutchman said it should not have come as a surprise to Greece's government that the European Central Bank has not relaxed limits on how much Greek government debt its banks may use as collateral.

"The Greek government gambled that if it negotiated with us the ECB would open its cashier windows, relax its rules," Dijsselbloem said.

3.38pm BST

Sentiment in the markets has not been helped by unconfirmed reports that Iran has seized a US ship...

#BREAKING: Iran holds U.S. ship, 34 sailors http://t.co/0S2aWYcLEV

3.23pm BST

The disappointing US consumer confidence figures have sent markets sharply lower - even lower than they were.

Worries about the state of the US economy have been revived by these latest figures, another set of weak data. But with the US Federal Reserve still keen to raise interest rates when it can, there are now conflicting views on the way ahead. Dennis de Jong, managing director at UFX.com, said:

Fed Chair Janet Yellen will be slightly dismayed at the lower than expected consumer confidence figures released today.

Most observers had predicted the levels of consumer confidence to rise, but gasoline prices that are steadily ticking upwards appear to have taken their toll. Though an interest rate rise is still on the cards for the world's biggest economy, US GDP is forecast to have slowed in the first quarter, which is posing more questions than answers. Yellen will have to wait and see before acting on interest rates.

Much lower than expected US consumer confidence sends #dollar #USD lower. #GBPUSD above 1.5300, #EURUSD at 1.0965

Fall in US consumer confidence attributed to a lackluster recent labor market and apprehension about the short-term outlook

3.09pm BST

Away from Greece, and as the Federal Reserve begins its two day meeting, US consumer confidence has come in lower than expected.

According to the Conference Board, the confidence index was 95.2 in April, much lower than the forecast of 102.5 and down from 101.4 in March. Inflation rate expectations were the lowest since February 2007.

Conference Board is now the lowest of the 3 US CCI pic.twitter.com/XsGncHm8MF

2.38pm BST

A quick recap.

Greek 10 years now down another 72 bp at 11% - lowest for a couple of week as the mkt reacts positive to the sidelining of Varoufakis

#Greece's options as outlined by Teneo Intelligence's decision tree # lookingahead http://t.co/NG99Ald1hs pic.twitter.com/RjdPR0cI6G

2.02pm BST

Yanis Varoufakis has announced plans to encourage Greeks to declare assets held in Switzerland to avoid tax.

After seemingly having his wings clipped yesterday, Varoufakis been cracking on with the nitty-gritty work of being a finance minister.

#Greece gov't considers a draft bill for 'voluntary' declaration of Greek deposits in Swiss banks (via @amna_news) #economy

There was a similar law for 'asset repatriation' passed in 2004 with a 3% (!) one-off tax and results were meager. #Greece

12.48pm BST

There's a lot of chatter today that Greece could be heading towards a referendum.

Alexis Tsipras lit the speculation during last night's TV interview, when he explained voters had not given him permission to sign up to the old bailout programme.

"If the solution falls outside our mandate, I will not have the right to violate it, so the solution to which we will come to will have to be approved by the Greek people."

Since #Tsipras' interview last night the referendum solution is officially on the table #Greece

2 ways to read Tspiras referendum talk: increase in uncertainty or commitment to appeal to Greek people if Syriza harder edge against deal.

Scenario: Greece cuts deal that exceeds Syriza mandate, takes it to referendum Question: what result would be required? Majority? Plurality?

@mdbaccardax Plurality. Yet there are constitutional hurdles to such a referendum: Constitution forbids referendums on fiscal issues.

Question: What is the "fastest" the Greek govt is legally allowed to conduct a referendum, since the day it is called? #Greece #Syrizanel

12.22pm BST

Greek bonds are continuing to rally, on optimism that a deal will be reached to avert the danger of default:

#Greece's 5yr default probability drops below 80% on fresh bailout hopes as majority of Greeks favour agreement. pic.twitter.com/eeiwDnHQso

12.17pm BST

Just in -- photos of Yanis Varoufakis following a meeting with Alexis Tsipras this morning.

They show Varoufakis still has the ear of the PM (who called him a valuable asset last night)....

11.26am BST

Austrian finance minister hopes the new Greek negotiating team makes progress, fast.

Reuters has the details:

Hans Joerg Schelling told reporters before a cabinet meeting that he learned of the move only via media reports but that it was "in order" for Tsipras to change the team, adding that "it just has to be quick...I hope we don't start again at zero."

"We hope...that the Greek government now gets out of the headlines, that they concretely back up measures with laws, valuations and schedules," he said.

11.17am BST

Another encouraging sign. The European Commission says that contact between Greece and its creditors have "intensified", meaning negotiations are progressing.

#EC's spox on #Greece: Contacts have intensified and allowed work to progress

11.10am BST

Despite the lack of progress, Joan Hoey of the Economist Intelligence Unit reckons Greece and its creditors can still break the stalemate in time.

That's partly because Eurozone leaders can't be certain how serious a Grexit would be....

The modus operandi of the euro zone is to seek compromise and to avoid incalculable risks. Especially after the 2008 global financial and economic crisis, risk aversion is so strongly entrenched in every single international organisation that few political leaders are prepared to gamble on Grexit. Against the backdrop of a fragile euro zone economic recovery and the tense geopolitics over Russia/Ukraine, letting go of Greece would mean stepping into "uncharted waters" as Mario Draghi, ECB president, put it. No matter what they might say about the euro zone being "ring-fenced" against contagion, and no matter how frustrated they are with Mr Varoufakis et al, euro zone political leaders do not want a Grexit.

Despite deep popular resentment of the austerity policies tied to the bailout programme, the vast majority of Greeks want to stay in the euro zone. This is a constraint on how far the Syriza government can push back in its negotiations with the Eurogroup. As time has gone on and the government's hardline stance has failed to wring concessions and heightened Grexit risk, popular support for the government's confrontational approach has ebbed.

The conceit nurtured by Syriza during its election campaign that it could reject bailout conditions but keep the country in the euro zone has been exposed".

10.52am BST

Back in Athens, a senior government MP has criticised the decision to shake up Greece's negotiating team and sideline finance minister Varoufakis.

Enikos has the details:

Speaking on private ANT1 TV, Alexis Mitropoulos, the Greek Parliament's First Deputy Speaker, said that "Yanis Varoufakis was the ideal negotiator and we should have backed him up further."

Mitropoulos further said that will not vote for any austerity measures and that the government should call for a referendum before agreeing on any deal with the creditors.

10.44am BST

Here's our own Angela Monaghan's story on the disappointing UK growth figures:

10.39am BST

Hello again. While I was off helping with our coverage of the UK growth figures, Yanni Kouts has been monitoring events in Greece:

#Greece PM Tsipras meets FinMin Varoufakis; to brief Syriza parl group later today over state of play with country's creditors.

#ECB's CAuri(C) says #Greece's exit from the #euro zone is not "a scenario that we are working on."

9.44am BST

Our Politics Live blog is taking the lead on today's surprisingly weak UK growth figures:

9.39am BST

UK Q1 #GDP in detail: Services +0.5% (Q4 +0.9%), Industrial output -0.1% (Q4 +0.2%), Construction -1.6% (Q4 -2.2%)

9.33am BST

This feels like a big blow to the Conservative Party; economists had expected growth of 0.5%:

Wow ... economic growth slows to 0.3% in 1st 3 months of the year, half what is was the previous quarter and well below expectations.

9.32am BST

Breaking: The UK economy grew by just 0.3% in the first three months of 2015.

That's a sharp slowdown on the 0.6% recorded in October-December 2014.

9.28am BST

Nearly time to discover how the UK economy fared in the first three months of the year.....

9.21am BST

Europe's major share indices are all in the red this morning, with investors fretting that the rally may have gone too far.

Traders are struggling to find the justification to keep pushing stocks at these elevated levels.

9.14am BST

Here's Sean Farrell on BP's financial results:

9.05am BST

Greek bonds are continuing to strengthen (but remain deep in the danger zone)

2-yr Greece Yields 21.08%, Down 107bps

8.52am BST

Hat-tip to Wolf Piccoli of Teneo Intelligence for producing a detailed 'decision tree' that outlines the various paths which Greece could follow in the months ahead.

#Greece's options as outlined by Teneo Intelligence's decision tree # lookingahead http://t.co/NG99Ald1hs pic.twitter.com/RjdPR0cI6G

8.37am BST

Greek bond yields are dropping this morning after prime minister Alexis Tsipras declared that an initial agreement with creditors could be reached by the end of next week.

The yield (interest rate) on Greece's two-year debt has dipped from 22.8% to below 22.4%, meaning its price has risen slightly.

#Greece's bond yields nudge lower on Greek optimism. 2yr yield drops to 22.4%. pic.twitter.com/CRbAkNZ8Ft

8.27am BST

Nearly one in two investors expect Greece to leave the eurozone in the next 12 months, according to a regular survey by German research group Sentix.

Sentix's Euro Break-up Index jumped to 49.0% this month, from a previous 36.8%, showing a higher risk of Grexit.

European politicians' promises to pursue the scenario of Greece keeping the euro are not taken at face value by about the half of all investors. In 2012 Mario Draghi calmed down investors with his ultimate commitment to the euro.

But is his pledge still valid for Greece today?

Draghi put to the test: one out of two investors expects a "Grexit" | sentix Euro Break-up Index... http://t.co/VbWWdY59BD

8.18am BST

Stan Shamu of IG confirms that investors are more upbeat about Greece, thanks to the shake-up of its negotiating team and Alexis Tsipras's comments overnight:

Europe has led the way this week and this is still on the back of optimism around Greece. There are some interesting developments in Greece at the moment with the country reshuffling its bailout negotiating team and forcing Finance Minister Varoufakis to the sidelines. Mr Varoufakis was seen by some as being part of the problem and as a result news of him being sidelined has been well received.

The bailout negotiating team met in Athens yesterday and is looking at some of the reform measures the Eurozone has been wanting to see.

8.10am BST

Greece - there was considerable optimism last night as the market reacted positive to the leaks

8.04am BST

There's a sense of optimism this morning after Greece's prime minister declared an initial deal with the country's creditors could be reached by the end of next week.

In a late-night interview with Star TV, Alexis Tsipras said that:

"Our goal... is to reach a first agreement this week if possible, or next week at the latest....I believe we are close."

Tsipras says he hopes there'll be initial deal at Brussels Group this week/next week at latest. "We're close to a minimum package" #Greece

Tsipras explains resistance to raising VAT on islands is because lower rates are there to balance higher costs faced by islanders #Greece

"If I end up having an agreement that puts me outside the limits (of my mandate), I will have no other resort....The people will decide obviously without elections, I want to make that clear."

#SYRIZA #Tsipras #interview, answering voters questions http://t.co/F3JKkhPhGn #Merkel #Varoufakis #Draghi #Eurogroup pic.twitter.com/oplkoFdT5V

Tsipras says Merkel has shown intention for deal with #Greece. Failure to reach agreement would be failure for her and Greek gov't #enikos

Tsipras says Varoufakis is a "significant asset" for gov't & #Greece, has full backing #enikos

Tsipras suggests enmity towards Varoufakis from EZ finmins is because they would prefer to deal with someone who is compliant #Greece

8.02am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial market, the eurozone and business.

Reacting to the news, a senior European Union official confided that it had become "impossible" to do business with Varoufakis. "It had got to the point where eyes roll," he said.

"People had got sick and tired of being lectured about austerity and the effects of the crisis. Any sympathy for Greece was eroded by his failure to draft concrete proposals."

Just published: front page of the Financial Times UK edition Tue Apr 28 pic.twitter.com/s10qwPvOPG

Those BP first quarter numbers nowhere near as bad as expected. Interesting one to watch at 8 a.m. open. https://t.co/ngsoSsP5We

Source	RSS or Atom Feed
Feed Location	http://feeds.theguardian.com/theguardian/business/economics/rss
Feed Title
Feed Link	http://feeds.theguardian.com/