Greece Talks Push Stocks and Interest Rates Higher
By: Tim McPartland,
Some sort of deal is likely to be worked out with Greece this week (most likely another kick the can down the road deal) and that liklihood has pushed stocks up and at the same time has pushed the 10 year treasury up by almost 4%–9 basis points.
A Greece deal is just 1 more piece of the puzzle that will push Yellen to raise short rates in September instead of waiting longer.
With all the cross currents we debate in our mind daily whether we would be better off without the SP500 hedge we have in place. While we have had a profit on the hedge of up to $1000 we currently stand at a loss of $353. We have never–ever had success with hedging–of course hedging isn’t free so if it helps us sleep better at night I guess it is worth something. While we believe that the Greece risk is now much less than a week or 2 ago we remain convinced that corporate earnings in the U.S. may have peaked given the dollar strength. We will continue the hedge for some amount of time–if for no other reason than to sleep well at night.