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European Short-Term Funding At Worst Levels Of 2010
For all that talk about good news out of Europe, it would be great if there was any "good" news to actually report, instead of just ECB's ongoing monetization of ever more sovereign debt at higher and higher yields, and the Eurozone regulators pretending its insolvent banks are healthy. Case in point - every single overnight funding indicator is now at the worst levels of 2010, including Libor, Interbank Deposit Rates, Repos and Commercial Paper. Nobody is willing to drink the European stability Kool Aid - the entire continent continues to be locked out when it comes to the ever critical ST funding market. As all this debt accumulates and needs to roll, it means the ECB will soon be required to provide not only long-term but short-term funding. In the meantime, the market continues to buy euros from Goldman.
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I can't say that this Euro action is logical, but I am not a bit surprised. A string of Spanish and Grecian bond auctions (previously perceived illiquid) have been executed relatively successfully - achieving a lower rate than the IMF's...
This seems to have spurred another monster short covering spree coupled with the ECB's 500 billion liquidity injection proposed in May (it had to be pumped into the system at one point or another).
Having started to accumulate a short position since the Euro hit 1.27 last week and a long DX position, I have to admit that I am a bit worried - this can get out of hand rather quickly (1.35 by the end of next week is a possibility). But I guess one must stick to his convictions at a time like this, also the softness at 1.29 provides some needed support...
I have been saying that US equities rallied and keep getting propped up due to this currency cross but it seems that today we are seeing a relative divergence. It will be interesting to see where we close to confirm this move...
Just seems too obvious but very logical. The same view could be applied during it tank to 1.18 handle. In same same position and worried too. Trying to avoid margin calls.
Also 85 on the DX was an important support that got broken and between 1.26 and 1.27, there were some vital resistances and a fib retracement...
If this thing blows up in my face, I will only have myself to blame for chasing a view rather than playing a high probability set up...
As the sang goes: the markets can stay illogical longer than one can stay liquid - in this case, a central bank can print more money than we can come up with to fulfill margin calls...
I really thought 1.275ish would hold.. I'm surprised.. This is the 6th weekly candle up in a row.. haven't done that since mid 2007.. I'm thinking along the lines of what I saw in a EUR/USD thread I thought was believable.. that is; they are driving it back up to 1.30 to get out of their longs.. but.. who knows..
Ditto. I doubled down already. They may well smoke a lot of us and shoot us like dogs before the thing swings back to where the fundamentals should take the euro (dowwwn)
Hey!?
I was asked to post by different traders and not say anything and now you junk me?
There's no pleasing you guys!
This is just frickin' insane. Euro is about to punch through 1.30 and keep going.
Sentiments exactly, but when this sucker breaks it's going to go down fast and hard. Accumulating shorts from here on out in small bites.
John Taylor on June 28:
“We are keeping our fingers crossed that maybe the euro’s appreciation lasts through July and into August. But then the euro is just going to get crushed as it’s an impossible situation in Europe.”
“The period we are in now is the euro’s swan song,” said FX’s Taylor. The EU’s bailout package is making “people think things are OK and maybe all will be alright. When the reality hits us in September it will be miserable. I expect the euro to go to $1 by the end of the year,” he said.
EU test results are due to come July 23... the higher the EUR goes the better.
By September, the spotlight will be firmly on US (deficits).
...or Europe (deathbed demographics, entitlements overload, dead weight of the state, regulatory cluserf...)
Jackasses! Buy the EUR - it's risk averse....bwahahahahahahahaa
Guess it means the US is percieved to be in even worse shape than Europe?
Wait a second...a month ago, the $ rallied because it was "less worse". Do all these changing opinions only happen to generate rationale for trading and, thus, TBTF profits?
Regardless, up goes the Euro and up goes the US equity market in tandem.
I'll be honest...the market makes absolutely no sense to me anymore. I'm all out...only thing I'm tempted by (market wise) is silver. Other than that...I'm here to watch the zombie apocalypse start.
Someone saw the latest US trade numbers with Europe and realised that a strong dollar is not in the best interests when it is vis a vis one of our best customer blocs.
Muir, I have a friend of mine that wants to know how to make your avatar larger.
ECB becomes lender of first, last, and only resort. Just like here.
there is no organic source of credit growth. The debtmoney systems are trying to implode
Currency wars.
Ya, frickin insane is right. The EUR is absolutely ramping. Volatility will be the name of the game. I'm shorting the living crap out of that thing once it hits 1.3
you may also note that LIBOR is still stupidly low so it will still work out.
Interesting price action in the commodity ccys...me thinks there is big trouble afoot
OT: Must read at Market Oracle from Hoisington Investment Management:
http://www.marketoracle.co.uk/Article21046.html
Prophetic article on Hoisington from July 27, 2007 at Forbes.com
http://www.forbes.com/forbes/2007/0723/048.html
Maybe the Euro is spiking because of the European bank implosion, just as the US Dollar spiked during the US bank implosion?
Interesting thought but highly improbable simply due to the fact that the dollar is a greater source of liquidity during a credit squeeze caused by a bank implosion.. Also, an inability to roll over dollar guarantees caused 2008's dollar spike - I can't picture Eurbor having the same effect...
the euro is spiking because it was dramatically oversold, because the USD is too strong and because the world understands that the EU will be tighter from a policy standpoint than the USA in the long term. consider that the USA is spending 4TLN on stimulus and the EU is spending maybe $1TLN on a "wrapper" for the member countries. they're in collectively better shape than the USA and money flows toward "tightness" -- the problem has been that they don't have a "central bank" per-se and as such, they haven't been viewed as "trigger happy" as the FED -- and for some time that has been desirable. not in the future. the euro action today signals a love of tightness
I do not necessarily disagree with you statement but I will add that you should look at the previous Euro spikes/DX dips and you will notice that a Spanish or Grecian bond auction has been the catalyst to the move. I don't think that you can simply classify today's action as a signal for the love for austerity - I would agree with you if you mentioned Britain, but I don't see how you can generalize "Europe" as a whole...
http://farm5.static.flickr.com/4137/4796743526_f8377f2904_b.jpg
http://www.federalreserve.gov/releases/cp/outstandings.htm
Where's the proof these deficits are actually receding and where's the economic results that supports deficit contraction? Where's the lamb? I cannot justify EUR's spike other than the US is clearly positioned for QE.2 and deflation is imminent. Does this also mean buy DXY???
The chart looks like maybe Goldman just sold all of its Euros...
Edit: nope. I jinxed it.
A manipulated market? In London? NO! Say it isn't so...
http://www.independent.co.uk/life-style/food-and-drink/news/speculators-...
'Nobody is willing to drink the European stability Kool Aid'
Somebody is.. EUR/USD puched 1.29 today..
Why are Eurodollar futures (the 3-month deposit, not the FX) making new highs in the face of "every single overnight funding indicator now [being] at the worst levels of 2010, including Libor, Interbank Deposit Rates, Repos and Commercial Paper" ?