Friday, July 21, 2011 2:10 – Today’s Markets, Greek Bailout, Budget Ceiling

Stock and bond markets are mixed today in the U.S. but higher in Europe and Asia. Gold is higher by 1% after 3 days of decline. Treasury yields are back down today but not as much as they were up yesterday.

The new Greek bailout version whatever is a partial default because some investors will get back less than face value on their maturing bonds while others will have to replace their maturing short-term bonds with long maturities. Fitch, the rating agency will declare it a default, they said today. The others should follow but there is extreme pressure on them not to do so from the parties that pay their fees. Sounds vaguely familiar. By the way, if you haven’t seen the movie Inside Job, which was an extremely well-done and not at all boring documentary on what caused the 2008 near-meltdown, you really should make a point to rent it.

In the U.S., the markets are nervous about all the haggling over the budget ceiling deal and the August 2 deadline is just 11 days away. Remember that any agreement in principle will need to be written down in specific legalese, usually 100s of pages long, so they just can’t do a deal at Midnight, Aug 1.

Everything is secondary to the budget impasse until that gets resolved.