Bonds and CDS for both countries are incredibly strong this morning. They are outliers versus almost anything else out there. Stocks are up a bit after a couple of rounds of overnight weakness. The strength in Spain and Italy is a bit surprising but so is the fact that the market isn’t completely in love with the move. It seems that the LTRO2 effect is in play and markets understand that.
A Greek CDS ruling is expected. My guess is no Credit Event yet, but clarity on what will constitute a Credit Event. If the ruling is a Credit Event – then sell because it would severely limit what other countries can do to manipulate bind holders into actions of their choosing.