Greece and China leaving room for Fed hikes

BofA Merrill Lynch notes:

Investor attention is likely to focus squarely on the start of Fed hikes now Greece and China tail risks have been temporarily curtailed. Had both tail risk scenarios unfolded and increased market volatility, there would be more of an argument for postponing rate hikes. However, this was not the case and Fed Chair Janet Yellen's testimony before Congress suggests the Federal Open Market Committee is ready to raise rates this year. In her testimony, she also continued to look past transitory factors leading to low inflation. Therefore, as long as the labor market and growth recoveries remain on their current trajectories, our US team's call for a September liftoff looks increasingly likely to come true.