Here is what you need to know.
Greece will hold a referendum on July 5. The Greek people will decide if the country will accept an accord with its creditors. As the way things stand right now, it appears the government will fail to make its 1.5 billion euro ($US1.67 billion) June 30 payment to the IMF. The government’s attempt at seeking a one-month extension of the bailout program was shot down by its creditors.
Capital controls have been implemented in Greece. Greek banks will be closed until at least July 6 in an effort to prevent capital from rushing out of the system. In the meantime, ATM withdrawls will be limited to 60 euros per day. Greece’s 2-year yield is sharply higher, up 1270 basis points at 33.39%.
China cut rates. On Saturday, the People’s Bank of China cut its key lending rate 25 basis points to 4.85%. The rate cut was the fourth since November as China’s central bank tries to combat a slowing economy. China’s key lending rate was at 6.00% before the rate cuts began in November.
Chinese stocks entered a bear market. Monday’s 3.3% slide has pushed China’s Shanghai Composite into bear market territory. The index has lost an astounding 22% since the June 12 peak.
Stock markets around the world are clawing back their early losses. Spain’s IBEX (-3.8%) paces the decline in Europe. Overnight in Asia, China’s Shanghai Composite (-3.3%) crashed 7.5% before trimming its losses. S&P 500 futures are down 21.50 points at 2074.25.
Puerto Rico cannot pay its debts. Puerto Rico’s governor, Alejandro García Padilla, conceded the island is going to have trouble paying off its $US72 billion in debt. Padilla said Puerto Rico will “probably seek significant concessions from as many as all of the island’s creditors, which could include deferring some debt payments for as long as five years or extending the timetable for repayment”. According to the New York Times, Puerto Rico cannot enter bankruptcy, and its inability to pay its debts could leave it in financial limbo for years.
GE is selling its fleet assets. The Wall Street Journal reports, “General Electric Co. has agreed to sell its U.S., Mexico, Australia and New Zealand fleet businesses for $US6.9 billion” to Canada’s Element Financial Corp. The deal raises Element Financial’s asset value to more than 21 billion Canadian dollars. GE is said to be seeking a smaller deal to get its European fleet assets off its books.
Apple suppliers have begun production of iPhones with Force Touch. The new phone will pick up how hard users are pressing the screen. According to Bloomberg, the feature, “lets users adjust the strength of their screen taps to bring up different functions.” A release date has not yet been announced.
The breakdown of the Asian Infrastructure Investment Bank has been announced. Reuters reports, “Countries defined as “within the region” will hold a combined 75 per cent stake in the bank. China’s share includes a 30.34% stake with 26.06% of the voting rights.
US economic data is light. Pending home sales are due out at 10 a.m. ET.