Wow! The euro rally is more than erased.
It’s plunging, and equity markets across the continent are tanking, as reports emerge that some kind of “selective default” is still possibly on the table in Greece.
Per this Dow Jones wire story, Jean-Claude Juncker has said that a selective default should be avoided, but that that couldn’t be guaranteed. The key thing to realise is that this means haircuts for bondholders (not Greece not paying a coupon), and the problem here is that it becomes an avenue of contagion, as bondholders elsewhere wonder if they’ll get hit the same way.
UPDATE: Reuters is reporting that the ECB is on board with this selective default.
Italian stocks are about 1.5%.
Germany is off 1%.
And here’s the euro, via FinViz: