Greece again buys time/Shanghai index/Fed’s Fisher

European officials in conjunction with the IMF finally came to an agreement to try to lower Greece’s debt to GDP ratio to 124% by 2020 from about 190% expected next year. The details on how to achieve it, that being a debt buyback, lowered interest rates and delayed payments of them and give back of ECB ‘profits’ on the debt it holds, were all pretty much as expected. What’s missing unfortunately is the only thing that we know works and that’s actual debt write-down’s (private sector has already had theirs and it will be the public sector’s turn at some point) but we’ll deal with that another day. After rallying 7% last week on expectations of a deal, the Athens stock market is down about .50% but the Greek 10 yr bond is rallying to a fresh high on the buyback initiative. Spanish bonds are a beneficiary of the Greek fire temporarily being put out as the 2 yr yield is back below 3% with the ECB still having not spent a euro on the OMT program. After seeing weak confidence figures in Germany and Italy yesterday, French consumer confidence held at a 10 month low at 84.

Elsewhere of note and discouragingly, China’s Shanghai index fell 1.3%, breaking below 2000 and closing at the lowest level since Mar ’09. After the Hang Seng index close, Hong Kong exports unexpectedly fell 2.8% y/o/y vs the est of up 6.2%. Imports were also less than expected. On the flip side, the Nikkei closed higher for the 8th trading day in the past 9 as the possibility of more yen printing continues to buoy stocks.

In the US, the Fed’s Fisher is holding to his hawkish stance by calling for the Fed to put limits on the amount of MBS and Treasuries they buy and he said there is “no such thing as QE infinity. QE infinity gets you into trouble.” On the possibility of QE4, Fisher said the Fed ‘doesn’t need to do any more.’ With a room full of doves, he’s one of the lone voices on central bank restraint.

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