Surge In Marginal Lending Facility Usage To One Year Highs Confirms Year End EUR Repatriation

Tyler Durden's picture

With four days to go until the end of 2012, it means that Europe can finally reveal its dirty underwear, and as it does at the end of every year, scramble to "window dress" its banks, who for one reason or another, suddenly find themselves needing gobs of liquidity - not USD-denominated liquidity, but domestic, EUR-based. So what do they do? They all, or at least those without direct access to FX markets and without assets to dispose of, engage in what is now a traditional year end surge in loans at the ECB's Marginal Lending Facility, whose punitive rate of 1.5% - a true outlier in this day and age of global ZIRP - makes borrowing from this facility truly a last resort option. And as the chart below shows, in the past few days, various European banks have come begging at the front door of the ECB's Frankfurt HQ and have demanded a whopping €16.3 billion, the highest amount in just about a year, going back to December 29, 2011.

What is interesting here is that this confirms, as we have been suggesting over the past several weeks, that the relentless push higher in the EUR virtually oblivious of global newsflow (which in turns correlates into a higher ES level) is nothing but more EUR repatriation by those banks who are not locked out of FX markets, and which don't have to pay an exorbitant fee to the ECB to procure much needed year-end Euros, and instead can go the foreign exchange route, sell USD assets, and repatriate the proceeds by selling USD and buying EUR.

Which also means that, just like last year after the surge in MLF loans going into 2012, the EUR too will proceed to slide, as the need for EUR goes de minimis, and everyone scrambles for the "safety" of the USD all over again.


And while on the path of the artifice that is the EURUSD rate, these 3 charts suggest the richness is unsustainable...

EUR vs Sov Risk...


EUR vs Swap-Spreads...


and comparing Fed and ECB balance sheets (implies a mere EUR300bn spend on OMT from the ECB - not enough to solve anything!)...

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Element's picture

Santa needed some pocket money.

GetZeeGold's picture



He left me an Xbox.....but he took momma's diamonds.

Stoploss's picture

Same MO as last time? First load up the mlp, then lower rates?

I seem to remember this from last year, thinking they only had two or three more shots.

Buckaroo Banzai's picture

Anybody else getting those "sign the assault weapons ban petition" banner ads? Makes me happy they are wasting their ad impressions on me. Sometimes I get three to a page.

Stoploss's picture

No, but that's the funniest thing so far today.

Im looking for the Ban Pelosi, and Reid petition, lemme know if you see it.

GetZeeGold's picture



We don't make fun of retards these fact we don't even call midgets......umm little people anymore.


My home boy explains....let me be clear, he isn't from my home.


Mr. Hudson's picture

: "and everyone scrambles for the "safety" of the USD all over again."

Big time.

Cursive's picture

Why doesn't Bob Pisani ever talk about this on CNBC?  /sarc

GetZeeGold's picture



They always cut away from Baghdad Bob....right before he gets to the good stuff.


Tyler doesn't trust me to post pictures....for very good reasons I'm this link will have to do.

edb5s's picture

"...whose punitive rate of 1.5% - a true outlier in this day and age of global ZIRP - makes borrowing from this facility truly a last resort option."


Comical, but true.  What a strange world we live in.

q99x2's picture

Time for some frontrunning.

SheepDog-One's picture

Everyone loves to party. but not so much paying the bar tab! And also, what happened to the 'big end of the year sell off'?

fonzannoon's picture

if gold dropped while the dollar weakened what will it do if the dollar strengthens....let me gues...

GMadScientist's picture

Deck the halls with vapor ballast!

JamesWill's picture

Only we can cross fingers and hope for the best these christmas.