The Federal Reserve will end its two-day policy meeting Wednesday with continued concern and speculation about how the combination of Greece’s stalemate and mixed U.S. economic data will influence the central bank’s push to increase interest rates.
Greece’s Prime Minister Alexis Tsipras is pointing to the International Monetary Fund as the cause of his country’s indebted situation and markets across the globe are responding.
As European policy makers pressed Greece to make the concessions necessary to resolve bailout assistance ahead of Thursday’s meeting of euro-area finance ministers, U.S. shares moved higher and Asian stocks rose for the first time in three days.
“Yellen is unlikely to come across as overly hawkish given the Greek situation,” said Shane Oliver, the head of investment strategy at AMP Capital Investors Ltd. in Sydney. “The markets had become a bit oversold. The bull market is still alive and well.”
The MSCI Asia Pacific Index gained 0.2 percent to 146.63 in Tokyo after slipping 1.2 percent in the previous two days.
55% Chance of a Deal
Mohamed El-Erian, chief economic advisor at Allianz, said he believes that a 55% chance exists that Greece won't get a new deal. He conceded, however, that a short-term deal could happen, if and when Athens puts into place the necessary reforms needed to reverse its struggling economy. According to El-Erian, it could take months before Greece exits the eurozone should it come to that.
Most Wall Street experts believe that a failure to reach an agreement will send U.S. stocks lower. They expect a sharp rally instead, according to Stephen Weiss, founder and managing partner of Short Hills Capital Partners LLC.
Close to 48% of the investors interviewed believe that a September rate hike is in the offing, down from 53 percent as recently as Friday. Fed Chair Janet Yellen may reveal additional data at a press conference Wednesday.