10 Feb 2012: Greece’s bailout rejected by Eurozone

FTSE 100 5879 Down 27bp
S&P 500 1351 Up 15bp
NIFTY 50 India 5381 Down 57bp

Major Stories

  • Eurozone rejects Greece’s bailout deal; Germany points out deficit projection errors
    • Greece’s bailout deal has been rejected by Eurozone owing to a Euro 325mn ‘hole’ in Greece’s plans
    • Germany have pointed out that given Greece’s current austerity measures, its debt to GDP ratio would still be 136% in 2020, compared to a 120% target set by Eurozone
    • A new set of requirements and an urgent deadline has been handed to Greece now
    • Luxembourg’s PM has bemoaned Greece’s ‘broken promises’ despite Eurozone and ECB’s cooperation to provide funds for a bailout
  • Markets fall on Greece’s failure
    • Euro is down 0.2% against Dollar
    • Stocks: FTSE All-World is down 0.6%; FTSE Eurofirst 300 is down 0.5%
    • Debt: US 10-year demands increase, pushing the yield down by 5 bp to under 2% now
    • Commodities: Gold is down 1.09%; Brent Crude is down 1.35%
  • Japan willing to go ‘solo’ on Yen
    • Japan have boldly stated that they will intervene to weaken the Yen as and when needed
    • While its unusual, Japan’s Finance Minister, Azum, actually revealed that he had ordered an intervention recently, when the Dollar had fallen to 75.63Yen; he saw this as ‘critical’ to protecting the economy
    • This is likely to create friction between Japan and the US; the US treasuries had already criticised Japanese policy of intervention last year, when Japan had sold Yen in times of low market volatility

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