WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Oil prices were higher in European trade on Monday after non-OPEC members, including Russia, agreed in a meeting held with OPEC members on Saturday to join forces and cut production by 558k/bbl as of January 1, 2017, the first deal in the last 15 years. In FX markets, the JPY was among the main underperformers while, on the flipside, the CAD was among the top outperformers supported by higher oil prices. Elsewhere, the Treasury yield curve steepened with the spread between the 2-yr and 10-yr yield widening to the widest in a year. Focus this week is on the December 13-14 FOMC policy meeting where market consensus is for a 25bps rate hike.
GREECE: The recent announcement of the Greek PM Alexis Tsipras for a one-off payout to low income pensioners and the postponement of the VAT increase to refugee crisis – hit islands seems to have perplexed official lenders as it had not reportedly been discussed with them first. Deliberations for the conclusion of the 2nd programme review are expected to be resumed later than previously expected with the return of the institutions’ technical staff to Athens possibly on Tuesday. Meanwhile, the differences between Greece’s official lenders, primarily the IMF and Germany, remain. The Greek PM Alexis Tsipras will reportedly pursue a political agreement for the completion of the review in his meetings with Francois Hollande and Angela Merkel later this week.
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