Will Greece Default?

That is the question weighing on the market right now as the in-fighting amongst Euro zone members appears to be dominating discussions. With no resolution in sight, risk aversion is heightened in the marketplace as global markets have sold off and the US dollar has strengthened on the flight to safety trade.

This is clearly the major theme in the markets and all else is taking a backseat until this situation is resolved, for better or worse. Meanwhile, there are riots taking place in Greece, and the Greek PM has changed his government cabinet which may be akin to rearranging the deck chairs on the titanic!

This situation and crisis threatens the global banking system and the consequences of a Greek default are unknown at this time. Whether the Euro can survive remains to be seen, especially if there is contagion to the other indebted nations. What is certain is that markets will be volatile as they hate the uncertainty of the situation.

CPI data came in for the Euro zone slightly lower than expected, though no one at this point can possibly be expecting a rate hike anytime soon at this stage of the game.

In the UK, retail sales figures came in worse than expected, posting monthly declines which sent the YoY figures to near flat.

In Switzerland, the SNB left interest rates unchanged at .25%, as recent franc strength has hurt exports.

So the markets are starting the morning in risk aversion mode, with stocks lower though commodities are slightly higher. Later this morning, the release of data in the US including housing starts, initial jobless claims, and the Philly Fed are unlikely to change sentiment.

Tags: market resolution government expected interest rates exports change sentiment