July's Market Outlook
The eurozone saves the “match ball” in Greece, where a new government was formed that is more willing to continue with the adjustments set in the financial aid package.
The European Union leaders reach agreements that represent substantial progress in the tug-of-war between ceding national sovereignty and mutualising risks, breaking the vicious circle between sovereign debt and banks, and improvements for growth. However, there are still some outstanding issues that should be clarified in the coming weeks.
The decision to increase exposure to risk assets more boldly depends on the definition of the details of the agreements reached so far, particularly:
(i) the design of a road map and a timetable for fiscal and financial integration;
(ii) confirmation of a more active role by the European Central Bank (ECB);
(iii) information on the condition of the bailout plan for the Spanish financial sector; and
(iv) the start-up of the European Stability Mechanism (ESM) in conjunction with the European Financial Stability Facility (EFSF), with a more clearly defined scope of activity.
For July's Market Outlook, please click here.