Europe is still the key focus for the market obviously and, within that, Greece – the saga never ends. At least the down days are much smaller than what we’ve seen in the past, although the rally in Aussie futures has been remarkable. I had been thinking late last week that our futures (bills, 3s, 10s) were ready for a rally at some point over the next week or two, but now, having seen that all on Friday, and on the RBA’s minutes, I’m left looking for the next opportunity to go short. I’m very surprised by the extent of the rally to be honest. The RBA was not dovish by any measure and if anything, the market should be more confident that the bank will not cut again in the near-term (with what we know now). Commercial bank moves complicate the picture a little bit, sure, but at this stage, moves have been modest. I’m not sure how this will play out, but my initial thoughts are that banks won’t want to lift margins too much. I mean, to do so would be the equivalent of taking out a full-spread advert in the WSJ or something – "Wanted. New competitors!” So there is a limit, I would have thought.
If the Greek vote gets through (expected in the next couple of hours, I believe) that may be the catalyst for a corrective sell-off, partial retracement or whatever. So watch out for the headlines there.