Greece: Stay tuned for next Wednesday

In light of the more positive tone from the institutions, broad support from the political parties domestically, the risks of a Greek exit have reduced in the very short term as the ECB should remain supportive as long as prior actions are passed in Parliament by next Wednesday and talks are headed in the right direction. 

Bloomberg reported late Sunday that the ECB could agree to delay a bond repayment by Greece due on 20 July after French intervention. Meanwhile, although it has yet to be confirmed, the ECB is expected to keep the ELA ceiling unchanged at the current level of €89bn and to moderately increase it only after approval by the Greek Parliament of the prior actions. At the time of writing, the Euro Summit is still going on.

Greece is walking a thin line. A number of member states have reportedly already been pushing for a temporary Greek exit as the lack of trust does not seem to be repairable. 

"Assuming that Greece can meet the ECB repayment (which could be delayed), we continue to believe that a Greek exit is more likely than not: trust can only be repaired via actions (and/or change to a grand coalition government)," says Barclays.

Negotiations and execution of a third bailout will likely prove extremely challenging, as banks may be forced to close (temporarily) and capital controls will need to remain in place for a while.