Save Ferris

Reminding me of the ‘Save Ferris’ campaign, French Budget Minister reaffirmed “the determination of France to do everything to save Greece.” Adding this to Merkel’s comments over the past few days, it does seem that Greece will satisfy and thus get the next 8b euro tranche from Bailout 1 in the next two weeks. Greek bonds though continue to say that soon after this, there will be a new deal on Greek restructuring and instead of a 21% haircut on a debt exchange, it will be closer to 50%. The Greek bond maturing in Aug ’12 is trading at 47 and the one in Aug ’13 is quoted at 49. EC Pres said he will issue proposals soon for a eurobond but that comment was followed by dismissal by the German Foreign Minister. Moody’s did downgrade the credit ratings of both SocGen and Credit Ag but are still above S&P. BNP was spared a downgrade and this morning they defended their liquidity situation. The same French minister that commented on Greece said they have “full confidence in French banks…There is no problem of capitalization, no problem of liquidity.” Papandreou, Merkel and Sarkozy will all chat today at 12pm est time. In the US, the avg 30 yr mortgage rate fell 6 bps to a new low of 4.17% and finally refi and purchase apps responded. Refi’s rose by 6% and purchases by 7%. II: Bulls 35.5 v 38.7 Bears 40.9 v 37.6. Bulls at 1 yr low, Bears highest since Mar ’09 (did get into 50’s in Oct ’08).

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