The Germans are coming around in supporting the French for the ‘we have no choice Greek debt rollover.’ It’s politically correct to call it voluntary but the Deutsche Bank CEO said it like it really is, we “offer our hand in a solution, not because we’re doing it gladly, but actually to enable policymakers to do something so that we, I’ll say it frankly, so that we don’t have a meltdown.” The details of what the Germans want will come out today on the question of length of maturity of new debt and otherwise. Either way, banks will trim their exposure to Greece and get a higher coupon than they currently are getting, assuming repayment. German May retail sales unexpectedly fell 2.8% and June unemployment didn’t fall as much as expected but the unemployment rate of 7% held at the lowest since the ’91 reunification. Euro zone CPI was 2.7% in June vs the est of 2.8% but well above the ECB target rate and the reason why rates are going up next week. Asian stocks responded well to the Greek vote and specifically the Shanghai index rose to a 5 week high and the Sensex index rallied to an 8 1/2 week high. Taiwan did raise interest rates an 1/8 pt as expected. Lastly, RIP QE2, for now.
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