Credit Markets – More than Greece, opportunities ahead

For weeks now the Greece tragedy has been dominating headlines. At the end of this nail-biting test of patience eurozone leaders agreed on a last-minute compromise in form of (pre)conditions for a new Greek bailout package. In spite this being far from being a done deal as implementation risks are high, it is more than Greece which matters to markets.  Lisa Backes, CIO and MD atYCAP Asset Management (Europe) looks beyond and analyses key market drivers and opportunities.

After the dust from the last Eurozone summit has settled the drifting-apart of monetary policy between the ECB and the Federal Reserve will remain another major topic throughout the rest of the year. The ECB is strongly committed to implement its expanded asset purchase program within the pre-established criteria and is expected to do more if required. In this context the ECB recently decided to add state-owned companies to its Quantitative Easing purchase list, demonstrating that they can still deliver surprises if they would like to.

Across the Atlantic, Fed chair Janet Yellen confirmed recently again that a first hike is still on the cards by year-end. With investors waiting for more clarity regarding the U.S. funds rates over the near term and in particular the precise timing, YCAP AM expects global volatility to rise ahead of an obvious change in US monetary policy. Much might depend on how dovish the Fed will act if they do raise rates.

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