Article / 12 June 2015 at 8:33 GMT

From the Floor: Bonds rise on IMF Greek walkout

Editor / Saxo Bank
Editor’s note: From the Floor takes advantage of's unique real-time access to Saxo Bank’s various trading desks around the globe to put our community in touch with the developments that matter to their portfolios.

  • IMF withdrawal puts the ball back in Greek court
  • Bunds trading stronger this morning 
  • Dollar sees little move after strong US retail sales data yesterday
  • SEK strengthens against the euro after Swedish inflation rose in May
  • Both gold and oil are rangebound

By Oliver Morrison

Call my bluff

The major story in bond markets this morning is the IMF withdrawal from the Greek debt talks. The IMF pullout puts the ball firmly back in the Greek court, and it's had a positive effect on bunds that began on initial headlines yesterday hinting at IMF dissatisfaction. 

"Bunds had already rebounded nicely and continue stronger this morning," says Michael Boye from Saxo's fixed income desk. 

Germany’s 10-year yield had moved above 1% for the first time since September on Wednesday, a sharp rise from the all-time low of 0.05% hit in April. 

"We are trading close to the 151 level for the future, which is 0.85% in yield terms. So it's very clear that risk sentiment has reversed and the whole theme of rising yields is off, for now at least."

Look for Greek assets to suffer this this morning, but Boye says it's more important to keep an eye out for the periphery, which has been holding up of late. "Judging by early trading, we're looking at modest spread widening of 5 basis points, which looks within a manageable range so far." 

All quite on the currency front

The Greek situation has quietened the currency markets, however. Saxo's head of forex strategy John J Hardy is puzzled that yesterday's strong US retail sales datawhich rose sharply in May for the third straight month, did little to move the dollar. 

"This is a bit curious as retails sales have been a key sticking point for the US recovery picture. They beat, but  they didn't beat strong enough to make dollar longs, especially given the Greek uncertainty, really pile into the dollar ahead of the next FOMC on Wednesday, which might be in wait-and-see mode again."

Greece is also making EURUSD difficult to trade ahead. Next week is massive, says Hardy, and we may actually finally get some clarity on Greece, and the focus now shifts to next week's Euro Group meeting on Thursday

Also worth noting is EURSEK. Sweden's inflation rate increased slightly in May, according to data yesterday. This saw a currency move, with the Swedish krona strengthening against the euro, which fell to SEK9.28 from SEK9.35 after the data.

But at the spreads suggests EURSEK should be trading up towards the 9.7000 range, says Hardy. "A key Swedish CPI data point yesterday could trigger more SEK buying/EURSEK selling, but we can see the Swedish krona's been a mess for quite some time."

SEK strengthened against the euro yesterday after Swedish inflation rose in May
 Source: Saxo Bank

Going nowhere fast

Both the crude oil markets and gold remain stuck in a range, laments Saxo's head of commodities Ole Hansen, with this week WTI making another failed attempt at breaking $62/barrel. 

What's the problem? Hansen says: "According to EIA's monthly support, demand is rising, but supply is rising even faster. Non-Opec supply is also rising, so all in all we are yo-yoing."

WTI crude was at $60.24/b as of 0655 GMT. 

Gold, meanwhile, is suffering as ETP holding continue to fall and stocks continue to rise. 


Retail sales surged in May, pointing to revived US growth – 
but why the lack reaction in the dollar? Source: iStock

Oliver Morrison is an editor at

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