Markets Overview

HIGHLIGHTS AHEAD

    The emergency Eurozone finance ministers and Eurozone Leaders’ summitin Brussels on Tuesday (7 Jul) came to naught as Greek PM AlexisTsipras came to the table with the same proposal in late June that wasalready rejected by the rest of the 19 Eurozone members. Donald Tusk,European council president, and Jean-Claude Juncker, EuropeanCommission president, jointly told a news conference that theGreek government has been issued a final deadline by this Fridaymorning (10 July) to submit detailed reform proposals to reach abailout deal by Sunday (12 July). The Eurozone finance ministers willmeet on Saturday (11 Jul) to review the [expected] Greek proposals fora new bailout loan before the EU leaders summit in Brussels on Sunday(12 Jul) that could sign off on a new bailout deal for Greece. VariousEuropean senior officials clearly stated yesterday that this is likely thefinal deadline for Greece and if no deal is agreed upon by Sunday, thena “Grexit” cannot be ruled out. Greek banks, which are closed since 3July last week as said to be likely to run out of cash in their ATMs inthe next two days. Meanwhile, a Greek government official in Athenssaid Greece would present a revised bailout request today (8 Jul) whilePrime Minister Alexis Tsipras is scheduled to address the European Parliamentin Strasbourg today as well.

    There is a light US data docket today (just the weekly MBA mortgageapplications, & the May consumer credit) and instead, market attentionwill be on the US Federal Reserve which is scheduled torelease the minutes from its 16-17 June 2015 FOMC meeting onWednesday (9 July, Thursday 2am Singapore time). While some willbe reading the text to glean for any insight about the Fed interest ratenormalization process and timeline, the importance/relevance of theJune minutes may already be reduced by the recent twist in the Greekcrisis developments. But of course if there were specific mention that aworsening in the Greece debt crisis may delay the Fed lift-off schedule,then that may see significant paring back of rate hike expectations inSeptember FOMC.

    Instead, we think markets may place greater emphasis on Fed ChairJanet Yellen’s speech on the US economic outlook in Cleveland this Friday(10 Jul) over the June FOMC minutes as this will be seen as a previewto her upcoming semi-annual testimonies to US lawmakersnext week (15-16 Jul). The rest of the data docket from Europe looksscarce as well with just the Bank of France business sentiment surveyfor June, and UK June BRC shop price index. The US corporate earningsreport season “unofficially” kicks off with aluminum producer Alcoa announcingits results for the second quarter on Wednesday (8 Jul) afterUS markets close.

    Meanwhile, the key data releases today (8 Jul) during Asian hourswill be from Japan. Japan’s May BOP current account reported a widersurplus of JPY1.8809trn (from JPY1.3264trn in April and well abovethe projected JPY1.5702trn). The improvement in the CA surplus waspartly due to the narrowing trade deficit which came in at JPY47.3bnin May (from