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"We must have discipline" - but why, though?

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  • The German crisis in the Euro area continues, with a Teutonic cry of "we must have discipline" being finance minister Schaeuble's initial (almost Pavlovian) response to Greek debt proposals. Subsequent Greek tweets (for the Euro area is government by Twitter) suggest that a compromise may be achievable.
  • The problem with all this political posturing is that bank depositors may take it seriously. The fate of the Euro does not lie in the hands of the German on the Greek governments, but in the hands of ordinary bank depositors in Greece and elsewhere. If depositors pull their money from banks, the integrity of the Euro is unlikely to survive.
  • UK retail sales are due, and in the wake of the Bank of England minutes may be worthy of some attention. The price effects of oil and supermarket condition will likely moderate the nominal headline figure, but also serve to stimulate underlying consumer demand in the UK.
  • There is little from the US data calendar of note. Overnight we heard from Fed President Bullard, giving a slightly hawkish bias to his comments. Although the minutes of the last FOMC were distinctly indecisive, since the Fed meeting there has been a steady stream of comment preparing markets for a June increase - comment that appears almost coordinated.