• IMF board approves Lagarde as Managing Director
  • German HICP inflation unchanged at 2.4% y/y in June
  • Case Shiller US home price index up 0.7%; firmer than expected
  • US consumer confidence falls to 58.5 in June from 60.8 from May
  • Richmond Fed composite index rises to +3 in June from -6 in May
  • Dutch FinMin unsure if EU can decide on additional Greek aid by July 3
  • Fitch affirms BNP Paribas at AA-; outlook stable
  • Portugal announces privatization of electricity companies EDP and REN by end of 2010
  • IMF’s Borges: Euro is most credible currency in the world
  • Greek Socialists seen eking out austerity vote at 12:00 GMT tomorrow
  • S&P 500 closes at highs, up 1.3% at 1297
  • US yields soar on firmer stocks, shedding of safe-havens up 9-14 bp along the curve
  • Oil rises $2.25 to $92.85/gold up $3 to $1500

It was really one story today: Markets prices in high odds of Greece avoiding default and voting for a medium-term austerity plan at 12:00 GMT tomorrow. Stocks and bond yields rose, spreads over safe-haven bunds narrowedm credit default swaps fell and the euro rose across the board.

Risky assets which had been shorted on fer of a Greek “no” were largely bought back on fears of a Greek” yes” for a second session today. EUR/USD reached 1.4398 before relenting today. Buyers on dips are seen now toward the 1.4325/45 area.

A side–effect of the unwinding of safe-havens was solid interest to sell JPY across the board today. USD/JPY jumped through 81.00 after poor US 5-year note auction today, reaching highs of 81.27.

The CHF was an outlier today, surging to a new record high against the dollar on Swiss corporate demand at quarter-end. Corporates are said to be very under-hedged against Swiss franc strength and are paying through the nose for cover.

Commodity currencies recoup some of their recent losses as the Greek saga looks to be coming to a favorable conclusion, at least for the near-term.

The big concern now is that the market has already bought the rumor. Will they sell the fact? That’s a clear risk, though I suspect the market may need a few more sessions to get all their short-Greece trades squared away…