No Agreement in sight

The weekend brought no breakthrough news on the Greece debt negotiations, with private creditors still failing to agree with the terms set by Greece. Greek debt has brought the negotiations to a standstill point yet again. Interest rates averaging 4.0% were considered as a good enough deal by private government debt holders, before official creditors including the IMF and the ECB called for yields to be no higher than 3.5%.

Italian Prime Minister Mario Monti and the European Central Bank President Mario Draghi, have agreed to work towards an expansion of the eurozone's permanent rescue fund. Both leaders would like to see the lending capacity doubled up to €1 trillion.

Last Friday, EU Member States decided to toughen the treaty rules in order to regain market confidence. The main change concerns the introduction of penalty payments for signatory Countries which within one year fail to include in their constitutions a rule that structural deficit cannot exceed 0.5% GDP.

Markets will be closely watching the US economy this week, as the Fed will release a report stating that it will take big step towards transparency, as the economy will have probably expanded 3.0 percent in the fourth quarter. 

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