- Peter Chatwell, senior rates strategist at Mizuho International
The overwhelming majority of Greek voters decisively rejected the aid package. Some 61.3% voted "no" to bailout programme, against 38.7% who voted "yes". The rejection is likely to be the biggest factor driving markets this week. What could be most interesting is how Portuguese, Spanish and Italian government bonds perform Monday. If these peripheral countries suffer a precipitous spike in yields, this could spark concerns over whether Greece leaving the currency bloc might cause further contagion to other weaker Euro zone economies. German Chancellor Angela Merkel and French President Francois Hollande called an emergency summit on Tuesday to discuss the financial crisis. Meanwhile. the Euro zone economy continued to show signs of a sustainable recovery, with the recent data from Markit on the regions' services sector confirming the view. The Euro zone's services PMI rose to 54.4 in June, up from 53.8 in the previous month. All the three biggest economies of the Euro bloc enjoyed a robust activity in the services sector, with the corresponding gauges rising in June. On top of that, Euro zone retail sales rose further in May, supported by improving labour market and low inflation, underscoring private consumption will remain a key growth driver in the economy. Retail sales climbed 0.2% from April and were up 2.4% from the same period last year. Robust consumer demand prompted S&P to upgrade its Euro zone growth forecasts to 1.6% in 2015 and 1.9% in 2016, from its March forecast of 1.5% and 1.7%.
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