Not surprisingly, Greece has officially asked for EU/IMF help. The melt down in their bond market this week made it an inevitability. The 45b of euros that will come their way will help in the short term but for the long term financial health of the country, it just bides time for an economy that will highly unlikely be able to grow out of their trouble and will at some point be back for more help. A debt restructuring would have been the best long term option for them, however painful in the short term it would have been. A region of bailouts for profligate countries does not a healthy union make and maybe that’s why the euro is seeing no bounce on the news. Greek bonds are rallying, CDS are narrowing and stocks are higher. Also helping European stocks was the April German IFO business confidence # which was 3 pts above expectations at the highest since May ’08.
US Treasuries are selling off after cnbc is reporting that more members of the Fed are pushing to start selling their $1.25t of MBS at some point soon. The FOMC meets next week and the pressure is clearing building on them to do something, whether thru rhetoric or action, to reverse their emergency monetary policy and QE that has been in place beginning in late ’08. Asset sales will likely be the first step of this process but considering the dovish stance of Bernanke, Kohn and Yellen, it won’t happen imminently.