Posts Tagged EU
ECB’s LTRO Goes Better Than Expected
Posted by Belisarius in Markets on June 30, 2010
The ECB biggest ever liquidity facility – EUR 442 billion one year maturity is coming due tomorrow. To reduce the strain on the banks, ECB introduced 3 month LRTO (Long-Term Refinancing Operation) which banks could use to refinance the maturing facility.
The market estimate for the LTRO size was EUR 220 billion – EUR 250 billion.
The ECB just announced the results of the operation. Apparently the banks rolled-over (only) EUR 131.9 billion.
Screen 1. LTRO Allotment
Source: Bloomberg
Whether this points to improving liquidity in European banking sector or the “good” banks just used cheaper market financing and the “bad” ones borrowed from the ECB remains to be seen. I would go for latter.
Friday Reading
Posted by Belisarius in China, Markets on June 25, 2010
I already posted links on stories covering same themes, but since I believe they are important, I will do it again.
FT Alphaville: The other liquidity strain — in China.
FT.com Blogs / Money Supply: ECB and the €442bn question.
Same Fix, Different Market Reaction
Posted by Belisarius in Markets on May 12, 2010
Just an observation on the market reaction on EU rescue package. When elsewhere in the world central banks buy worthless paper it’s apparently good for the markets, but when ECB (the most prudent among them) is pressured to buy, it’s apperently not good enough to reassure the markets.
Although, I believe that it would be better both for Greece and the world, that Greece was left to default and have it’s debt restructured, recent events have introduced new positive moments. EMU countries and the ECB have made it clear that they will do whatever it takes to avoid an EMU country default and that some kind of joint fiscal system is an option. By the recent measures a common guarantee of debts is introduced, maybe a step towards fiscal union.
Friday Optimism
Posted by Belisarius in Markets on May 7, 2010
After frustrating American and Asian sessions, looks like the markets have calmed down. After opening sharply lower European equities are trading at -0.6%.
What to say on the U.S. action yesterday? Maybe only that the technology has evolved since Black Monday in 1987 and the trading programs were shut down (changed) very fast enabling the markets to recover large part of lost grounds.
Conclusions? Investors are greedy and fearful at the same time. We will probably see latter outweighing the first in the short term.
Greece Bailout Reads
Posted by Belisarius in Markets on April 11, 2010
Well, the time has come to put the money on the table. The problem is that the amount promised has to probably be multiplied by a factor of 3 to be enough to finance Greek budget deficit and refinance Greek public debt, to only subsequently result in an wasted time and money. Again, only principal reduction can help (save) Greece. Just a remainder, Argentina was also “bailed out” before it defaulted on its debt.
Interesting, interest rate at which the loans will be granted is IMF benchmark plus 300 bps charge. The charge will serve as an incentive for Greece to borrow in the markets and it was demanded by Germany. Like they can.
Monthly Strategy – March 2010
Posted by Belisarius in Monthly Strategy on March 1, 2010
Equities
In the macro arena we have leading indicators rolling over, and a stream of worse-than-expected data pieces on U.S. housing, U.S. employment, U.S. durable goods ordered and large move lower by consumer confidence.
Seems that the markets do not appreciate the data. Things that move the markets are only FED policy on rates, dollar strength and Greece debt problems. China credit tightening in forgotten for the time being (at least to the next announcement).
No Growth In Europe
Posted by Belisarius in Markets on February 12, 2010
The initial jobless claims positively surprised declining 40.000 from the prior week and reaching 440.000. The consensus was at 467.000. It looks that combined with census hiring the positive cold continue.
The markets yesterday closed positively yesterday on news that E.U. will back up Greece. The statement was obviously a product of lack of consensus. Today Euro continued its downward path. Maybe a true market reaction.
A lot of economic data today. Consumer sentiment came out at 73.7 vs. 75 consensus and 74.4 prior reading.
Chart 1. University of Michigan/Reuters Consumer Sentiment
Source: University of Michigan/Reuters
What?
Posted by Belisarius in Markets on February 11, 2010
The equity indexes moved higher on the statement by EU officials and European politicians on Greece. In short the statement offers no concrete solution; it orders Greece to cut it’s deficit; to solve the “statistical measurement problems”, even calls the IMF…
A mess and we move higher on that…
Greece Again
Posted by Belisarius in Markets on February 8, 2010
Markets still focus on Europe and in particular Greece. There are some rumors today that Unicredit and Deutsche bank have ceased to accept Greek government bonds as a collateral; there are also some rumors that the capital flight from Greece is reaching alarming levels. It looks the Greece story is approaching its climax and we will soon witness a bailout or a default (probably by a one or more Greek banks followed by sovereign default).
Jean- Claude Trichet On Deficits
Posted by Belisarius in Markets on February 5, 2010
As I wrote yesterday: Can’t See The Forest For The Trees; the EU deficit and debt problems are far smaller than for the U.S., particular U.S. states, U.K. and Japan. Jean- Claude Trichet seems to agree. Bloomberg story: Trichet Struggles to Convince on Euro-Area Solidity.
Still, Trichet said the “solidity” of the euro area “is not necessarily very well known” and its situation compares “very flatteringly with a number of other industrialized countries.”
He said that according to the International Monetary Fund, in 2010 the average deficit for the entire euro region should be around 6 percent of GDP.