GREEK BONDS BUY ONE GET ONE FREE

 The Greek Pantomime Continues

The situation in Greece again dominated the markets although most of the real volatility was confined to the bond markets rather than Forex markets.
Matters came to a head with the downgrading of Greek Bonds to Junk by Standard & Poors. Greece was finally forced to formally request their bailout ,agreeing to a new round of further austerity measures.

The Euro recovered from lows but appetite for the single currency remains poor and any bounce from final EU government approval may prove short lived.
It remains difficult to gleam anything Euro positive from the bailout and even commitment of € 120 Billion over 3 years could still prove inadequate. There still remains the possibility of a large spanner in the works on two fronts. Firstly an escalation of Civil unrest in Greece beyond the May Day street fighting and sustained Union opposition. Secondly there seems a distinct possibility of a legal challenge in Germany on the basis of it being a Violation of European Treaties. Angela Merkel has dragged her feet worrying about regional elections and has flitted between being the fairy godmother and the wicked witch in the whole Greek pantomime.

Most of the major currencies remained narrowly mixed. However, the stock markets looked distinctly edgy last week. The US market as ever seems to hold the key and any further sell off could prompt a much bigger clear out. The Jap Yen which looked to be wobbling itself would of course benefit from this.

Technically the outlook for the Euro remains poor under USD 1.3420 and with current sentiment continues to look vulnerable.

Finally the week ahead has the long awaited UK election. If the Conservatives can squeeze a working majority then Sterling could enjoy a good move up to € 1.20 plus . On a hung parliament while the initial reaction may not be that large Sterling will remain very vulnerable to a sell off. Gordon Brown seems to have surpassed himself and sunk any hope of a labour victory and his reclassification as Junk awaits him.Perhaps he could be repackaged with a bunch of Greek Bonds and sold off. Now who can we think of to arrange that I wonder?