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Greek “no” vote sets stage for possible Euro exit


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The "no" vote by the Greek electorate has increased the probability of a systemic financial event in the euro zone. In early morning trading on Monday, the Greek two-year yield rose to more than 50 percent. We now anticipate a 90 percent probability that Greece will exit the euro zone. Thus, price movements in asset markets will largely be driven by news flow and policy pronouncements from Brussels and Athens in the run up to the critical July 20 €3.5 billion payment deadline Greece owes to the European Central Bank (ECB). If that payment isn't made, it is probable that the ECB will cut off liquidity to the country via its emergency lending assistance program.

In the U.S., investors will see a relatively quiet week of economic data releases. The major market-moving event will likely be Federal Reserve Chair Janet Yellen's speech on the economic outlook on Friday at 12:30 p.m., ET. 

Data on the service sector, the U.S. trade balance, first-time jobless claims, wholesale inventories and the federal government's monthly budget statement will all be published this week.

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