The debt crisis in Greece is far from being over and a prolonged stalemate might mean that the markets will be more volatile in the coming weeks. With most analyst already pricing in the base case of a Greece Euro exit, the stalemate might mean that Greece might be preparing for a smooth transition out of the euro with the banks remaining closed for the second week and the markets closed.

Today the Finance minister asked for a three-year programme, from the bailout fund (the European Stability Mechanism). And in return, Greece would commit to: “to a comprehensive set of reforms and measures to be implemented in the areas of fiscal sustainability, financial stability, and long-term economic growth." the measures would include “Tax reform related measures” and “Pension related measures” -- two of the “red lines” that proved so hard to tackle in recent months. it is the sincerity of these reforms that still needs to be tested, with a couple of summits still on the cards with the peak of which will be on Sunday.

The FOMC meting minutes had the following highlights:
  • Fed thinks it is on track to raise rates this year, but it is worried about Greece.
  • members agreed to continue making decisions about the appropriate target range for the federal funds rate on a meeting-by-meeting basis, with their decisions depending on the implications of economic and financial developments for the prospects for labor markets and inflation."
  • Most FOMC members, however, saw the labor market needing to show further improvement in order to warrant the first increase in the Fed's main interest rate since July 2006.

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