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A ton of negative headlines are coming out of Europe right now.According to reports from Reuters, the summit of EU leaders tomorrow will produce few (if any) clear details about leveraging the European Financial Stability Facility, private sector involvement, and Greek debt sustainability.
This would probably be a big disappointment for markets, which have been expecting something, though perhaps not a complete endgame for the euro crisis.
It also seems to contradict statements made by European Council Chairman Herman van Rompuy and European Commission President Jose Manuel Barroso on Sunday, which promised a detailed leveraging and bank recapitalization plan.
Despite the headlines, however, the truth these reports remain uncertain, as most are unconfirmed rumours.
At the same time as Dow Jones reported that we wouldn’t hear a specific bank recapitalization number tomorrow, it also reported that the Dutch Finance Minister said that Ecofin decided on a definitive plan.
The FT is also reporting that an EFSF leveraging plan could take weeks to finalise.
If the rumours are true, the best case scenario is that EU leaders could announce announce a thorough plan but may still be waiting on, say, specific numbers from the European Banking Authority’s new stress tests.
Just to add to the fire, there’s also talk about the European Central Bank halting their Securities Markets Programme, which allows them to buy sovereign bonds on the secondary market. A halt to those purchases could sent yields even higher then they currently are.
This is just adding fire to the sell-off started by news that an Ecofin meeting tomorrow had been cancelled.
Nonetheless, expectations are tanking for tomorrow.
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