Posts Tagged ‘2/10 curves’

Notes From Underground: The Most Dangerous Word to Eurocrats is REFERENDUM

February 28, 2012

Tomorrow is LTRO DAY in Europe as the ECB will reveal the size of its next tranche of 3-year loans made available at the BALANCE SHEET RECESSION rate of 1%. Several rumors tried to upset the market today as “insider gnomes” floated one story after anotherĀ  that the size of the LTRO would be 280 BILLION EUROS, which is at the low-end of current GUESSTIMATES. Each time the equity markets broke on the rumors, they snapped immediately back as the global financial system is floating on an ocean of liquidity. Higher OIL? NO PROBLEM, MAN! SOVEREIGN SOLVENCY ISSUES? NO PROBLEM!

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Notes From Underground: Today, LTRO Was Nitro

December 20, 2011

The power of the ECB’s 3-yr LTRO program was in full force today as the Spanish 3-month BILL AUCTION provided the spark to ignite the kindling of the massive amount of liquidity provided to the banks via the LONG-TERM REFINANCING OPERATION. This has not been a secret as we have repeatedly discussed how the 2/10 YIELD CURVES HAVE RECENTLY GONE FROM INVERTED TO POSITIVELY SLOPED. The move has been so dramatic that the Italian and Spanish curves are almost the same as the German. Bloomberg had the closes on the Italian at +164, the Spanish at +172 and the German at +174. This movement is quite dramatic and the Spanish auction today merely confirmed the power of the recent ECB action.

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