Let’s go Slovakia

Markets await the vote of the Slovakian Parliament to approve the expanded EFSF, the last country of the 17 euro members to do so. After the head of the opposition party said he would vote yes on a 2nd vote if the 1st vote failed, it eased concern of a failure of passage. Assuming no surprises, attention has shifted to what comes next and DJ is quoting an EU senior official saying finally, “The discussion is on a haircut, how big it needs to be and whether sovereign creditors may be involved.” Last night Juncker, who heads the euro finance ministers, said a 60% cut may be necessary but his spokesman said he didn’t mean to give an exact figure and only meant to say it would be above 21%. Either a debt swap or outright haircut will be the two options. The ECB will certainly be pushing for the former since their balance sheet is polluted with junk sovereign debt. Once a decision is made amongst the parties involved, the focus will then be on containing the collateral damage both to other sovereigns and to the banks that hold sovereign debt. Also today, the troika today will release their decision on whether Greece behaved enough to get their next allowance check and release of it is expected. In the first monetary step of an Asian central bank to reverse the economic concerns, Indonesia unexpectedly cut interest rates by 25 bps to 6.5%, reversing its Feb hike. China’s sovereign wealth fund bought Chinese bank stocks in the secondary market, news of which was announced after the Shanghai index close but before the Hang Seng closed

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