Another day and not a step closer

Another day and not a step closer to agreeing to the terms of another Greek bailout has yields in Greece spiking again to new highs and the CDS of Ireland and Portugal also moving to new record highs. The Spanish 10 yr yield is just a few bps from 11 yr highs. Merkel and Sarkozy will meet on Friday to discuss their differences as France is on the side of the ECB in not wanting any restructuring whatsoever. European Finance Ministers will gather again on Sunday after yesterday’s meeting provided no new details. After the US close yesterday, Moody’s put on review France’s big banks, BNP, SocGen and Credit Ag for credit downgrades due to their exposure to Greece and all three stocks are down more than 1%. Responding to the PBOC RR hike after their close, the Shanghai index fell .9% and the Hang Seng index, which was open after the move, fell again to a 3 week low. The Sensex index fell 1% ahead of an expected rate hike from the RBI tomorrow. In the US, with the avg 30 yr mortgage rate falling to a 7 month low of 4.51%, the MBA said refi’s rose 16.5% to a 6 month high and purchases were up 4.5%. According to II, institutional investor sentiment continues to get less bullish as Bulls fell to 37 from 40.9 and Bears rose to 26 from 22.6 (both levels last seen in Sept/Oct) with many still expecting a further correction as they rose to 37 from 36.5.

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