The incumbent Greek prime minister, Kyriakos Mitsotakis and his centre-right New Democracy party have secured the largest share of the votes in the general election but has fallen just shy of a simple majority.
Current data indicates that New Democracy has secured around 41% of the votes with Alexis Tsipras’ Syriza party having an underwhelming night, gaining just 20% of the votes. In terms of seats won, Mitsotakis secured 146 seats but is five seats short of a majority. However, Mitsotakis has suggested that he would not form a coalition, which would likely mean that there would be another election later next month where New Democracy would seek to pick up an extra five seats.
The elections and prospect of protracted political paralysis has sent bets against Greek bonds to their highest level since 2014. As the FT writes, “the total value of Greece’s bonds borrowed by investors to wager on a fall in prices — known as shorting — hit its highest level since 2014 this week at over $500mn, according to data from S&P Global Market Intelligence — up from around $65mn at the start of the year”.
This, however, remains a small proportion of Greece’s debt which is currently around €400bn. This comes as Greek government bonds have outperformed some of their European counterparts in recent months, with the spread between the Greek 10-year and the bund narrowing from 280bps in October 2022 to 160bs today. S&P also recently raised the economy’s growth status from stable to positive.
All eyes are now on any updates from Mitsotakis and whether the Greeks are in for a run-off election next month.
Headlines around the G7 meeting in Hiroshima this weekend have been underpinned by Western leaders committing greater support for the Ukrainian war effort. This comes just days after the Biden Administration decided to lift the veto on the resale of US-made F-16 fighter aircraft, while it has also been announced that the US will help train Ukrainian pilots. Other topics covered included relations with China, nuclear non-proliferation and climate change with the group reaffirming their support for countries in the APAC region who feel increasing pressure from Beijing.
Tomorrow afternoon at 1500 will see the release of Eurozone Consumer Confidence, which has been ticking up in recent months. This comes alongside the release of Global PMI Data Releases thoughout the day tomorrow (Eurozone: 0900; UK: 0930; US: 1445). On Wednesday, RBNZ will make their latest Interest Rate Decision ahead of the UK Inflation at 0700 in the morning. Later that evening on Wednesday at 1900, the FOMC Minutes will be released.
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