As has been hinted at for the past few days, Germany and France have agreed to involve the IMF in a joint backstop that will be there for Greece ONLY if they run into a funding crisis. Greece needs to raise about 20b euro’s by the end of May to meet upcoming maturities. ECB Pres Trichet who said he wanted to avoid using the IMF yesterday, said he was “extraordinarily happy that the government of the euro area found out a workable solution.” Greek debt is rallying, stocks are up 3% and the euro is higher. Greece issues notwithstanding, the stock market the past two days has been stopped in its tracks because of the sharp rise in US interest rates which are falling a touch today. Bankrate.com said the average 30 yr mortgage rate rose to 5.11%, up 11 bps in 2 days and to a one month high. Helped out by the weaker yen, the Nikkei rose to the highest since Oct ’08 and the rest of Asia rallied as they will be more immune to a global rise in rates.
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