Greece held their referendum over the weekend on whether to accept the most recent batch of reform proposals form Eurozone creditors, despite those proposals no longer being on the table even before the referendum began.  Greek leaders figure they're in an even stronger bargaining position now that the world has seen that 60+ percent of the population voted against--well, it's not really clear what the vote was about. 

At first, the referendum was billed as a decision about staying in the Eurozone.  Then it was 'downgraded' (via Greek government officials' media efforts) to a mere show of support for the government to argue for a better bailout deal.  At this point, we have no reliable way of knowing what the average Greek citizen thought they were voting for, but it's at least clear they voted "no."

In reality, the contents of the ballot and the voting process itself weren't really that important.  It was a weird waste of time for all parties involved and here's why.  A "yes" vote wouldn't have mattered because the head of the Eurogroup already made it clear that if the Greek people voted for the proposed reforms, that the current government couldn't be trusted to work in good faith on implementing reforms.  In fact, a 'yes' vote would have created far more uncertainty and delays.  It may have even required a snap election in order for the negotiations to move forward. 

A "no" vote is far simpler.  It's in line with the heretofore defiant attitude exhibited by Greek officials when it comes to negotiating with EU creditors.  And the extra time needed to conduct the referendum was in line with Greek officials efforts to delay the negotiations as much as possible.  Perhaps that, then, was the purpose of the referendum--simply to add some imagined sense of legitimacy to the delays.

For all practical purposes, it's really July 20th that matters when it comes to negotiations, bailouts, deals, etc.   That's when Greece owes an even bigger chunk of change (€3.5bln) to the ECB.  Missing a payment to the IMF simply put Greece in arrears, but missing a payment to the ECB could affect Greece's "Emergency Liquidity Assistance" (ELA), which is like a survival allowance.  We can expect a much greater sense of urgency leading up to that date if no new deal has been struck.  There's really nothing of much consequence before then, unless an unexpectedly robust agreement is reached--something that seems unlikely to say the least.

Early overnight Treasury trading showed a strong response to the referendum vote, but it's important to keep in mind that it's safer for bond traders to 'buy first and ask questions later' when it comes to these sorts of EU systemic risk milestones.  Even then, the movement is fairly insignificant in the bigger picture.  The larger the context considered, the less it looks to matter.

Greece will not save rates, though that doesn't mean that rates cannot be saved.  If rates improve this week, Greece will merely have been at the right place at the right time.  At most, it could be considered as something that 'gave a push' to something much larger that was going wherever it was going regardless of the push.  Neither Treasuries nor German Bunds have made any new highs (in yield) since early June. 

So although we haven't seen enough strength to consider the bad times are over, we also haven't seen the bad times continue to accelerate.  If you're an optimist, you could look at June like the first instance of ground-holding ahead of a bounce (toward lower rates).  The only dire caveat there is that the same could have been said for May.

Expect Greece to continue to provide background noise for the bigger-picture themes.  Specifically, will 2015 continue to be the year that average global rates bottomed out?  Will the Fed stay the course for a 2015 rate hike or has international uncertainty and a lack of inflation/wage-growth pushed back the time frame?