Sarkozy leaves “no doubt” on the EU support for Greece

France’s Sarkozy left “no doubt” in comments over the weekend that the EU stands behind Greece in its attempt to restructure and pay/refinance its debts. There was also talk of the creation of a European Monetary Fund which would recreate a version of the IMF for the Euro region to help those members under financial stress. Greek 2 yr yields and their 5 yr CDS are both at the lowest in 6+ weeks and Greek stocks are at 6+ week highs. The other troubled debt situation in the world (among others), Dubai, is also seeing a bounce in its stock market and a narrowing of CDS after the FT reported that Dubai World this week wants to begin discussions this week on restructuring $22b of debt. With regards to steps in China to cool parts of their economy and the global concerns it has engendered, a PBOC official said specifically that the rise in reserve requirements is not meant to tighten policy but to just remove some “extremely loose” policy.

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