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Could It Be A “NAI”?

10 July 2015 by lberuti

Greece tested the midnight deadline, but they eventually came with proposals late yesterday. It looks as if they show some meaningful concessions, and that was enough to restore optimism in the market. The gap is not closed yet, and there remains some hurdles to clear before Europe has a deal in earnest to keep Greece in the Euro. The Greek parliament has to validated the measures, and the Eurogroup has to accept them, which despite France best effort is not a given (some German lawmakers were quoted as saying that the “Greek reform proposals are no basis for further negotiations” and that “Greece needs a new start with its own currency” as Sunday’s referendum has not been forgotten by everybody). Nevertheless, risk premia ripped tighter across the board. Once credit indices got going, they never looked back and they are closing at the tightest levels of the day: iTraxx Main (ITXEB) 7.625bps tighter at 67.75bps and iTraxx Crossover 32.5bps tighter at 297bps.