The news that keeps coming out of Europe is just too good not to have been scripted by some secret society of brilliant comedians.  The dialogue between Greece and its creditors would make Abbot and Costello proud.  In fact, it's too good to have even been scripted.  The best part about Greece and Europe is that unlike Abbot and Costello, we don't need to suspend any disbelief that either party ever knew "who's on first?" or in this case, "who's paying this bill?"

Both fortunately and unfortunately, that comedy is the most noticeable facet of this version of Greek/Europe drama.  As we've discussed recently, markets don't seem to care too much.  This was made all the more apparent yesterday (probably) when late day Euro-schtick failed to inspire much of a reaction. 

The long and the short of it is that headlines first reported a deal had been reached at the 11th hour.  Markets weren't necessarily expecting a finalized deal today, but they were certainly expecting more of an update than had been provided by the end of the day (which, until the 11th hour, was nothing).  So it came as something of a surprise to see headlines suggest that the EU and Greece "Reached an Agreement."  Similarly, it was no surprise to see the Euro currency improve and bond yields rise (and MBS fall).  After all, a Greek exit is the better scenario for domestic rates.

But moments later, both sides were quick to retract the original headline (or clarify it's misleading phrasing?).  Greece, in particular, vehemently denied there was any extension of an existing bailout, and Eurogroup officials diplomatically admitted that nothing was accomplished today and it wouldn't be until Monday that any further work would be done on it.  Markets quickly returned to the same levels they were at before the headlines.  The following chart shows that bounce.  In the top section, it looks like it might have been sort of a big deal, but the time frame is expanded in the lower section and the takeaway is very different.

Today still holds some potential for headlines out of Europe, but they would only be to clarify where consensus existed in yesterday's talks.  That may leave more emphasis on domestic events for once, with the morning's Retail Sales data and afternoon's 30yr Bond auction.