Although Europe is not out of the woods yet, at least there is some consensus about the navigation in which to get there. The markets have been rallying this morning with the news that authorities have finally come to an agreement in how best to deal with the Greek crises satisfying previous concerns. Even the bonds markets have been celebrating as yields have fallen through out the Eurozone including Spain, Italy, Ireland, Portugal and Greece. The Greek 2 year bond yield in particular has dropped to 27 per cent and although still significantly high, this is a decrease from a high of around 39 per cent at the start of the week.

There have been significant compromises most notably by the ECB who have conceded on accepting Greek collateral if the EFSF guarantees the loans. The likely scenario is that the bailout will now be likely seen as a selective default by agencies. Private bond holders will be involved for the first time to contribute to a target of €37bn in addition to the new €109bn bail out fund.

A sigh of relief? For the time being yes. The key is that a solution has been found to satisfy the parties involved and the idea being that until Greece is able to financially stand on its own two feet again, it will be supported by Europe. There will be relief also felt by Ireland and Portugal as well as Greece as the rate in which they have to pay back their own bailout fund will be cut to around 3.5% which were previously around 5.5%.

Greece still has a long way to go and most likely will still have a debt to GDP ratio that will be unsustainable and will have to be addressed again in the future. At least for now there is a light at the end of the tunnel although there could be some delay in getting there.