Mendoza School of Business

GLOBAL MARKETS WEEKAHEAD-After Greece, the worries only mount

Published: June 15, 2012 / Author: Richard Hubbard

The following is an excerpt from a Reuters article that quotes Finance Professor Jeff Bergstrand on the euro zone’s financial crisis and the U.S. economy. This story also appeared in Reuters India and the Irish Independent.  To read the entire article visit: GLOBAL MARKETS WEEKAHEAD.

The Greek elections set the stage for a volatile week in the financial markets but, barring a surprisingly negative result, immediate policy changes look unlikely though a heavy schedule of high level meetings will keep investors on edge.

G20 leaders gather in Mexico on Monday, the U.S. Federal Reserve’s rate setting committee meets for two days from Tuesday, euro zone finance ministers meet Thursday, and a mini-summit of German, French, Italian and Spanish leaders is scheduled for Friday in Rome.

Announcements from any one of these events could move markets sharply although most big investors currently hold extremely risk averse positions, and don’t look set to change their views in the coming week, or for months, on fears the crisis in Europe has yet to reach its nadir.


The intensifying euro zone crisis could have an impact across the Atlantic in the other big event of the week – the U.S. Federal Reserve’s policy making meeting on June 19 and 20.

Most economist don’t expect the Fed to announce any further easing in its already loose monetary policy according to the latest Reuters poll, especially with government bond yields at record lows.

“Here it’s a entirely wait and see attitude. What happens to our economy is pretty much outside our control right now because so much hinges on Europe,” said Jeffrey Bergstrand, Professor of Finance at the University of Notre Dame near Chicago.

Asked about the prospect for policy change, Bergstrand, a former Federal Reserve economist, said: “Absolutely nothing is going to happen.”


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