AtoZForex.com Amsterdam — Now that the moment of truth for Greece is nearing, it is even impacting the large US banks in an unintended matter. Although for JPMorgan Chase & Co. it’s has been a contrasting case, since JPMorgan Chase has publicly been fond of the Greek long-dated government bonds since the start of this year. Even with the latest news upon Greece’s ultimatum on its deal with creditors or otherwise no IMF repayment on June 5, seemingly JPMorgan Chase is confident in Greece and still recommends investors to take action on Greek bonds.
Why JPMorgan Chase is confident in Greece
The US bank’s view on the case is quite remarkable, since it is in total contrast with most market analysts, who argue investors to stay sidelined. However, last Friday JP Morgan recommended publicly that investors should take 10 basis points earnings on a long position in the three percent Greek bond, maturing in February 2042.
As the potential contagion of Greece to tip the securities, following the comment of the rates analyst of JP Morgan London, Mr. Gianluca Salford: “Given the pressure to hold Syriza together, a catalyst for an agreement in the form of missed payment and imposition of capital controls might be needed.”
Securities’ prices to remain range-bound
In another comment of JP Morgan on Friday, the US bank stated that it is expecting that securities’ prices are to remain range-bound. As the bank’s Strategist Robert Tancsa wrote in a note: “To break out of the recent range on either side, we think that tangible evidence of an agreement is needed (i.e., the Greek parliament passing measures) or talks should break down completely.”
As earlier reported by AtoZ, Greece faces four payments this month, totalling close to 1.6 billion euros. A few days ago, it has even been reported that Greece intends to lump together its June payments to the IMF for the end of this month. The standoff between the various parties upon the terms attached to the international aid, have triggered the liquidity squeeze, while knocking Greece’s economy back to recession.