To be sure, though market reaction to the vote appeared muted early Monday, global markets are likely to take their cue from Greece in the short term. Indeed, last week was dominated by a widespread aversion to risk, a function primarily of increasing worries over Greece, with most equity markets falling and so-called “safe haven” bonds rallying.
Still, the continued benign monetary environment and low bond yields should mitigate the size of any correction, and the systematic impact will likely be limited. As such, perhaps more important for U.S.-based investors will be the outcome of second quarter earnings. With estimates coming down aggressively, the U.S. economy recovering and dollar strength moderating, U.S. companies should have an easier time beating estimates this quarter.
Sources: BlackRock, Bloomberg
Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock. He is a regular contributor to The Blog.