St James Place : Drachma drama

In 1972 German television aired a sketch by Monty Python, in which the leading lights of Greek philosophy face off in a football match against a team of Germany's leading thinkers. In the end, the Greeks win 1-0, even though the only goal (scored by Socrates) is technically offside.

Last week, the two countries appeared to be at loggerheads once more, and the risks are anything but philosophical. Yields (which move inversely to prices) on two-year Greek bonds rose to their highest since June last year, following a decision by the IMF to refuse to help Greece with its debt repayments, although recovered somewhat late in the week.

This week's bulletin also includes:

• Discord between the EU and IMF over the financing of Greek debt raised market concerns over the country's July debt payment.
• French bond spreads reached their widest level against German Bunds in four years, on ECB tapering and rising political risk in France.
• Economic indicators for the UK and Continental Europe suggested positive economic momentum, despite political concerns.
• The Trump rally appeared to return, after the president said that a 'phenomenal' corporate tax announcement was imminent.

View this week's Market Bulletin, which contains thoughts and opinions of St. James's Place and our range of investment managers on the key issues affecting investors.