General nervousness ahead of the Greek debt exchange March 8th deadline has markets lower in addition to the repercussions of China’s decision to ‘target’ 7.5% GDP growth as Asian markets were down across the board. The verbal jawboning to get this Greek deal done is heightening as the FT is reporting the IIF, the entity representing creditors, said “There are some very important and damaging ramifications that would result from a disorderly default on Greek Government debt” where in a confidential document, the FT reports “the IIF has said that contingent liabilities of a disorderly default would probably be in excess of 1T euros.” The euro is at a 2 week low vs the US$, the European bank stock index is at a 4 1/2 week closing low and yields of Spain, Italy and Portugal are all higher. In Asia, the RB of Australia left rates unchanged as expected but said they have leeway to cut rates “should demand conditions weaken materially.” Brazil’s economy grew 2.7% in Q4, the slowest pace of growth since Q1 ’10.
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