Greece’s coalition leaders and interim Prime Minister Lucas Papademos have finally come to an agreement – just four hours shy of a European finance minister summit commencement.  The announcement has boosted European markets as well as the Euro, with the single currency rising to trade above 1.3300 – and higher by 0.32% on the session.

According to ECB President Mario Draghi, the central bank president was contacted this morning by Papademos – with the interim PM stating that an agreement had been reached.  The sticking point?  Keeping coalition leaders at odds was a required 300 million euro cut in pension costs – that would accompany a 20% reduction in the country’s minimum wage benchmark.  Coalition leaders saw the pension cuts as too aggressive – noting that the measure could place the Greek economy in an infinite recession.  Minor contention also focused on further Troika monitoring during the duration of the second bailout – but quickly fell off the map.

However, the need to make 14.6 billion euros in obligation payments seemed to have trumped the desire to loosen austerity measures, with Greek leaders likely set to obtain a second lifeline of 130 billion euros ($172 billion) within days.

With all the pieces falling into place – with regards to the European resolution plans – it seems that fear of contagion to other nations may be waning.  The evidence is clear when taking a look at periphery economy debt in countries like Portugal and Spain.  Portguese benchmark 10-year notes, although still relatively high, have declined to 13.28% from as high as 17%.

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