Markets are Likely to Shrug Off a Greek Tragedy

Greece’s debt drama is getting louder and more dire as negotiators lose patience, but some market players are shrugging off a potential default as little more than a hiccup in the European market rally.

“Medium term, there is a very clear potential that Greece should go out [of the euro zone],” Michael Strobaek, global chief investment officer at Credit Suisse, said last week, citing the country’s “notoriously ineffective” reform efforts.  But while a Greek exit from the euro zone, dubbed a Grexit, might be tragic and chaotic for Greece, financial markets might not react much.

“That’s not a black swan thing. It’s a grey swan, I guess. I don’t think the markets are going to riot,” Stobaek said. “Even if (interest) rates were to go up because Greece went out, it’s not a disaster,” for other heavily indebted countries such as Spain and Italy because they will still have access to relatively low financing rates, he noted.

CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.