There is not much news that needed to be dissected so I think it is time for a quick look at yield curves. For simplicities sake I will keep the analysis to the generic 2/10 curves in the countries that have sophisticated capital markets. Why are the curves important? In looking back at the crisis that forced the ECB‘s Mario Draghi to announce “there will be no TABOOS and we will do whatever it takes” to sustain the euro currency and the entire European project. It was the 2/10 curves in Europe that were providing so much of the problem. The talking heads in the media continue to point to the 10-year debt instruments in Europe as being the most significant element. The Italian auction did this. The Spanish auction did that. I urge us to be more attentive to the shorter end of the curve and especially the two-year note.
Posts Tagged ‘FTSE’
Notes From Underground: They Loaded 275 Billion Pounds and What Did They Get?
October 6, 2011(Another day older and deeper in debt.)
No surprises from the ECB as they held rates at 1.5% as Trichet ended his reign at the helm of European banking by paying homage to the FONZ: Never admit that you were wrong. The ECB did announce that it was extending its policy of providing liquidity to EUROZONE banks at extremely low rates for a period of 12 and 13 months in an effort to prevent any immediate bank run. Also, the ECB announced that it would buy up to 40 billion euro of covered bonds, but that should not be a big deal for covered bonds are the best collateral so many banks will probably not be running for funding posting the highest rated debt.
