The stock market plans to open more than 2% higher on news that European officials have agreed to a strategy to combat its debt crisis.

The 10-year and 30-year Treasury yields are each eight basis points higher at 2.28% and 3.30%, while the two-year yield is steady at 0.30%.

S&P 500 futures are 25.7 points higher (+2.08%) at 1,263.10 and Dow futures are 203 points higher (+1.72%) at 12,005. 

BMO Capital Markets says there are three facets to the agreement. 

The first: private holders of Greek debt accepted to a 50% voluntary writedown. 

"That will cut Greece's debt load by about €100 billion, but appears as though the debt-to-GDP ratio will still be above 100%," BMO said. "Greece's target debt ratio is 120% of GDP by 2020. The Greek PM hailed the deal and said that Greece will no longer run primary deficit from 2012, which suggests that Greece's debt load will be sustainable."

The second: the European Financial Stability Fund will use up to five times leverage to provide support to sovereign debt markets including Spain and Italy. 

"That will reportedly put about €1 trillion in play," BMO said, noting the EFSF will offer insurance to debt purchasers in primary markets and also provide seed funding for a special investment vehicle to raise money from the private sector and sovereign wealth funds.

The third: banks need to recapitalize.

"After running another round of stress tests, European officials declared that banks need to raise €106 billion in new capital in order to bring their core tier one capital ratios to 9% by mid-2012," BMO said. "Greek banks face the biggest shortfall, not surprising with the huge writedown. Banks in Spain (€26.2 bln), Italy (€14.8 bln), France (€8.8 bln) and Germany (€5.2 bln) also have work to do. Banks are being asked to raise the capital on their own (from markets) initially, and if that doesn't work they can turn to the government, and if that doesn't work the last option is the EFSF."

Meantime, light crude oil jumped 2.79% overnight to $92.71 per barrel; gold prices remained steady at $1,723.60 per ounce.

Key Events Today:

8:30 - (Actual: 2.5%) The first estimate for third-quarter GDP is expected to come in at 2.5%. Low? Yes. Yet that's nearly double the 1.3% rate in Q2 and the fastest growth since Q2-2010. The growth is coming from multiple areas - retail sales, job growth, and industrial production were stronger than anticipated, as Citigroup points out, while business investment and trade improved too.

"Some easing in gasoline prices, plus better availability of vehicles after the Japanese earthquake and related supply disruptions should help consumer spending grow about 2.0%, compared with only 1.3% in the second quarter," said IHS Global Insight. 

"But the best news should come from very sharp increases in business capital spending, both for equipment and structures, an important vote of confidence in the recovery," they added. "The better growth performance in the third quarter doesn't mean that the economy can't 'double-dip' back into recession, but it suggests that it has more momentum than there seemed to be just a month or two ago, and underscores that the primary recession risks are from external shocks, with Europe the biggest wild card."

Janney Capital Markets predicts just a 2.1% rate, but even that, they note, "would mean that the domestic economy grew by a wider margin in the third quarter alone than in the whole first half of the year."

8:30 - Initial Jobless Claims (Actual: 402,000)  are expected to get a 2k trim to 401k in the week ending Oct 22. Last time, in the payroll survey week, the four-week average fell to 403,000, which compares quite favorably to September payroll survey week of 422,250.

"The data likely continued to signal possible improvement in other labor market indicators," said Citigroup. "Beneficiaries probably fell by about 40,000 leaving the insured rate unchanged at 2.9%."

• Treasury Auctions:
• 1:00 - 7-Year Notes

10:00 - Pending Home Sales