If Greece heads to another round of elections, the anti-austerity movement is expected to strengthen. It appears to be only a matter of time before central bankers have to step in again. The Spanish 10-year is hovering at yield levels not seen since November 2011, before the ECB’s unlimited three-year loan program for banks.
It is possible we are looking at a similar scenario to summer 2010, when stocks weakened considerably between May and July. Things did not turn around until Ben Bernanke strongly hinted at QE2 in his August 2010 Jackson Hole speech.
In a May 13 video, we outlined numerous ways to monitor the markets over the coming weeks.