EmailSome things got settled yesterday, namely the matchup for Super Bowl XLVI. Other things did not. As far as the market is concerned, the negotiations between Greece and private holders of its debt are still in the wild card round.
There are a number of reports that indicate the Institute of International Finance (IIF), which represents private creditors, has made its final offer. Now, it is up to the EU finance ministers and the IMF to determine if that offer goes far enough to meet the established goal of lowering Greece's debt to 120% of GDP by 2020.
If it is determined that the IIF's offer does not go far enough, things could get wild. At this juncture, though, it appears as if the market is hopeful that the EU and IMF are going to give their blessing to the negotiated deal, which reports suggest will likely involve a 65-70% loss on Greek bonds.
The euro is up 1.0% against the dollar; most European markets are trading higher, led by Greece (+3.5%); and sovereign bond yields in the eurozone remain in check, particularly for Italy (6.09%) and Spain (5.12%).
The blessing from the EU and IMF could come as early as today, although there is still a chance that this issue torments the market throughout the week in the same way Billy Cundiff's missed field goal will torment Baltimore Ravens fans throughout the year.
This promises to be an eventful week, too, for reasons beyond the EU finance ministers' meeting and the Greek debt swap agreement.
The president will deliver the State of the Union Address on Tuesday; a new policy directive from the FOMC will be communicated on Wednesday; and the advanced Q4 GDP report will be released on Friday. In between, earnings results will be announced by 117 S&P 500 companies.
Not surprisingly, there isn't a great deal of conviction in the futures market this morning. Currently, the cash market is indicated to start today's session on a relatively flat note.
As of Friday's close, the S&P 500 is up 4.6% year-to-date while the Dow, Nasdaq, S&P 400 Midcap, and Russell 2000 are up 4.1%, 7.0%, 5.9%, and 5.9%, respectively.
--Patrick J. O'Hare, Briefing.com
Patrick J. O'Hare is Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial, please email researchsales@briefing.com.
