Today was the day the world’s major central banks decided to “shock” the markets and provide a coordinated intervention to help ease the pressure in the Global bank lending markets. LED BY THE U.S. FEDERAL RESERVE, the OVERNIGHT INDEXED SWAP +100 WAS LOWERED BY THE FED AND OTHERS TO +50 POINTS, AS WELL AS THE MARGIN REQUIRED FOR ECB LENDING TO BANKS WAS DROPPED TO 12% FROM 20%. This is a technical move by the world’s banks to try to ease the pressure in the interbank lending market. I believe this is the first act in a concerted attempt to shift market psychology.
Posts Tagged ‘jobs’
Notes From Underground: The World Awaits the State of the Union but it is Sarkozy in Search of A BalconyJanuary 24, 2011
First and foremost: My thoughts and prayers go out to the Russian people as the nihilistic elements of global terrorism crafted its senseless actions on the Moscow Airport. It is not my bullish view on Russia that provokes my thoughts, but rather the ugliness of NIHILISM. Random terrorist acts are to be opposed wherever and whenever they raise its spectre of wanton destructiveness. The Russians will of course respond with a heavy hand for Putin et al care very little about public relations. Brutality will beget brutality. Political expediency will trump all rationality for neither Medvedev nor Putin will want to be perceived as weak in the eyes of a resurgent nationalistic populace.
Let me state out again as to why the FOREX markets are going to be a difficult investment in 2011. The emerging markets and commodity-based currencies have been the repositories of global capital seeking to take advantage of the Chinese and India growth phenomena without having to actually invest in the countries themselves. If you like China, buy the Australian equity or currency as it provides a proxy on Beijing’s growth policies: A classic case of providing picks and shovels rather than mining yourself.
We were back in form today as the risk on profile was back on. The EUR/YEN was well-bid as risk was the theme, but we want to watch the YEN to see if the correlation of YEN as the risk barometer is beginning to breakdown with the present political developements in Tokyo taking its toll. The S&PS Wednesday put on a significant rally to solidify the risk on profile.