Following the announcement of a 3 year plan by EU and IMF for Greece jitters in the markets have calmed down a bit over the last 24 hours. However, with details to be revealed over the coming days and especially Germany still having to approve the aid package, risks have just been deferred into early May. The Greek government announced €24bn of cutbacks. Retirement age will move from 53 to 67 and the 13th and 14th salaries for public and private workers are to be cut. With little buy-in by the unions Greece could see more civil unrest.

Overnight Moodys announce that it will review the Greek credit rating after the aid package and if not satisfied Greece could be downgraded several notches.

Ireland, Portugal, Spain and Italy have been strongly affected by the recent crisis. Especially yield spreads for Irish and Portuguese bonds have widened out substantially. At the same time liquidity has disappeared from those markets with bid/ offer spreads as wide as 250bps. The NTMA announced that it could cancel next months auction of bonds should "irrational" prices persist. Despite this Italy yesterday managed to sell €7.6bn of bonds with good demand at wider spread levels.

On the more optimistic side several market indicators seem to expect a positive solution to the Greek crisis. Equity markets rallied to make up some of the losses of recent days and the Euro/ Dollar rate has bounced of its low of 1.3112 to above 1.33 this morning. However, investors will have to wait for more certainty until the final announcement of the aid package.