As it turns out, the reason we’d heard about the meeting of Greek officials and the troika starting earlier in the day yestersday while never hearing anything else before domestic markets closed, was that the closed door meeting was going on the entire time.  Even though the portion of the meeting with the heads of Greece’s political parties concluded shortly after 5pm (EDT), Prime Minister Lucas Papademos said that additional issues needed to be worked on immediately so a deal could be reached ahead of Thursdays Eurogroup meeting.  EU/IMF Officials weren’t seen emerging from his office until 10:50pm, almost 6 hours later.  Here are a few of the relevant Reuters wires ranging from 5pm-11pm:

·        RTRS - GREEK PARTY CHIEFS' MEETING ON EU/IMF BAILOUT CONCLUDES - STATE TV

·        RTRS -  GREEK PM SAYS ONE REMAINING ISSUE REQUIRES FURTHER WORK AND DISCUSSION WITH TROIKA

·        RTRS  - GREEK PM SAYS DISCUSSIONS WITH TROIKA TO CONTINUE RIGHT NOW SO DEAL CAN BE CONCLUDED AHEAD OF EUROGROUP MEETING THURSDAY

·        RTRS - GREEK POLITICAL LEADERS TO MEET AGAIN ON THURSDAY TO RESOLVE REMAINING ISSUE - PARTY OFFICIAL

·        RTRS - SUPPLEMENTARY PENSIONS REMAIN ONLY STICKING POINT IN GREEK BAILOUT TALKS - PARTY OFFICIAL

·        RTRS  - GREEK PARTY LEADERS AGREE MINIMUM WAGE LEVEL TO BE CUT BY 22 PCT - SOCIALIST PARTY SPOKESMAN

·        RTRS - GREEK PARTY LEADERS AGREE NOT TO SCRAP HOLIDAY BONUSES - SOCIALIST PARTY SPOKESMAN

·        RTRS - GREEK GOVT OFFICIAL SAYS WE HAVE NO CHOICE BUT TO FINALIZE DEAL TONIGHT

·        RTRS – 10:50 PM EDT - EU/IMF OFFICIALS LEAVE GREEK PM'S OFFICE AFTER TALKS ON BAILOUT-REUTERS WITNESS

·        RTRS – 10:58 PM EDT - GREEK FINMIN VENIZELOS SAYS ONE ISSUE ON BAILOUT DEAL HASN'T BEEN SETTLED YET

Note in particular that all points except one—supplementary pensions—were resolved.  Then note that Papademos said in December that “unless the system of supplementary pensions is reformed by mid-January, the country will have fiscal evaluation problems with the troika.” (full story) 

Yeah…  We don’t know what to say about that either…

Suffice it to say that things have been, still are, and probably will continue to be a mess when it comes to getting Greece “sorted-out.”  As time goes by, we get the impression that markets are caring less and less about the short term headlines and are more interested in longer term adjustments based on longer-term progress. 

But “less interested” doesn’t mean “not interested” in this case.  Apparently the fact that there’s only one sticking point left in the negotiations is good thing, or at least Treasuries traded it that way  after the bulk of the dust settled, having risen back well-over 2% shortly after the last newswire above and are slightly higher in the first few minutes of domestic trading at 2.027.  MBS are miraculously 1 tick higher at 103-27 in Fannie 3.5's.

In addition to the ongoing headline potential out of Greece, we get our first real economic data of the week as well as the last real Treasury auction.  The data hits at 8:30am and 10:00am with Jobless Claims and Wholesale Inventories respectively.  Then at 1pm, Treasury will auction $16 bln in new 30yr Bonds.  Data, and to a greater extent, the auction are perfectly entitled to move markets today, but their ability to do so could rapidly erode with the emergence of potent enough headlines out of Greece. 

What will be truly telling is the market’s reaction to either a best-case or worst-case scenario.  Given our assertion above that markets seem to be caring less about the short term and more about the long term, if the current bailout negotiations end up fully resolved and in the best possible way, if 10yr yields do not then break 2.09/2.10-ish, then it’s basically a bounce within the broader range and in the big picture, really nothing to write home about (though it would certainly be unpleasant in the short term).  If there’s catastrophic failure and 10’s stay above say 1.95, again, non issue.