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 ‘Europeans’
Notes From Underground: Geithner to Europe–Walk This way; Merkel to Geithner–Dream On
October 17, 2011Just when it looked like the risk-on paradigm was gaining some traction, Chancellor Merkel, through her spokesman, Steffen Seibert, said, “…dreams that are taking hold again now that with this package everything will be solved and everything will be over on Monday won’t be able to be fulfilled.” The global equity markets were experiencing a continued rally from Friday when the Merkel statement was released and the market immediately went into sell mode and risk off. The U.S. equity markets tried to maintain Friday’s sizable rally as the news of CITI and WELLS FARGO earnings provided a momentary boost. Overnight the U.S., markets were supported by the news that KINDER MORGAN was buying the pipeline and energy producer, EL PASO.