Euro Basis Swap
So the Euro Basis Swap is once again a topic of conversation. It was certainly on the radar screen of the bears as one of the rates that was not responding to the “Grand Plan” or other policy actions. On September 15th, the first attempt at global co-ordination to bring the rate down was done. […]
(BN) ECB Coordinated Policy Action Is ‘Big Deal’ — From September 15th
The story below is from September 15th. On September 9th, SPX closed at 1154. On the morning of the 15th the “unprecedented” global co-ordination was put in place. SPX went to 1210 that day, closed at 1216 the next and was at 1130 by September 22nd. History doesn’t repeat itself, but it seems like no […]
So I Beat The “Cut” Announcements By 2 Minutes…
As I suggested in “headlines” we were due to get a move by the ECB especially on the back of China’s move. This isn’t quite that, but similar idea. More people just bought stocks than know what a central bank swap line is. More people are fading the rally than know what a central bank […]
Headlines And What They Mean
The market has decided that we will get IMF/ECB support, ECB rate cuts and QE3. The headlines continue to be messy at best, but the market has decided that the leaders will “see the light and go for the only possible solution”. They probably will, though there is scant evidence that it is really a […]
(BN) *GERMAN 1-YEAR NOTE YIELD FALLS BELOW ZERO, FIRST TIME ON RECORD
Maybe declaring Germany’s safe haven status as dead was premature? If this is the market “punishing” Germany for their reluctance to print, there may be some Germans asking for more such pain. One premise behind the idea that Germany will cave and let the ECB print its way to “salvation” or a bigger crisis, was […]
3 Strikes And You’re In!
The “Grand Plan” on October 27th had 3 prongs. Bank recapitalization. That has been a failure. The EFSF gave up on that and just said it would loan to member countries so they could recapitalize. Since the EFSF was supposed to lend to governments anyways, how is this different? So fail on any form of […]
Financial Bonds Are Hit By Deleveraging – Basis Widening
Remember how many people were complaining about how illiquid CDS was. What a bad indicator it was compared to bonds. That it was unfair that MS bonds were under pressure due to CDS? That was the “spin” back in late September and early October. It didn’t matter that CDS volumes are higher than any individual […]
EFSF – A Flowchart
Here is our best attempt at a flow chart for the EFSF that tries to capture everything it does. If it looks complicated, that is because it is complicated. Member States There are 17 Member States who provide Guarantees to the EFSF. Ireland, Portugal, and Greece have “stepped out” and are actually not providing guarantees. […]
Grand Plan 2 or Grasping at Straws?
Is break-up and default the equivalent of Armageddon? A big reason the market wants to rally on any positive noise is the firm conviction that default or break-up is the equivalent of Armageddon. The belief is that without a bazooka or magic bullet, the markets
EFSF Guidelines Analyzed
The EFSF released: EFSF Guideline on Primary Market Purchases EFSF Guideline on interventions in the secondary market EFSF Guideline on Precautionary Programmes Maximising the capacity of the EFSF (capitalization and spelling direct from the EFSF). If the crisis could be ended by the creation of acronyms and the use of the word “modality” then we […]
