While the deadline to participate in the Greek debt exchange is later tomorrow, the IIF seems to be giving us a play by play as this morning they are saying the participation rate is up to 39%, hopefully on there way to north of 75%. Italian and Spanish bonds are rallying in anticipation of an orderly process but the Spanish stock market traded lower for a 3rd day to the lowest since Nov, continuing its underperformance on economic growth concerns. With respect to US stocks, while some thought yesterday’s stock market selloff was nervousness about Greece, it was more concerns with global growth, post China’s news, and this sets us up for a key test for stocks. While I still believe every rally is a sale because global QE is done for now, we’ll get a bounce if the Greek deal gets done. The question though will be what happens after that bounce as yesterday’s selloff was clearly a reality check.
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