Did The Fed Just Buy Europe A Week?

Tyler Durden's picture

One of our most watched indications of the pressure on European funding markets is the EUR-USD cross-currency basis swap. This simple trade is a way for European entities to take the excessive EUR funding they can get from the ECB and 'swap' it into USD to meet their significantly problematic USD funding needs. It has smashed higher (well lower in the charts) as the cost of the transaction moves with demand for the swap - indicating that demand for USD is huge and we are in as much of a liquidity crisis as we were in the middle of the 2008 critical period. What is fascinating to us is today's reaction - a 22bps jump - while being large, merely moves us back to the same levels of stress we were at one week ago. So even if this is seen as some huge form of liquidity surge, it seems not to have even solved the liquidity problems of banks, let alone solvency problems.

Short-term we are back to stress levels in the USD swap funding market from only a week ago. But on a longer-term basis, this is still extreme by any standards.

Charts: Bloomberg

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
vast-dom's picture

Not even a week. This is all just so disgusting! And illegal! And unconstitutional! And.....

Momauguin Joe's picture

Half life by Friday. Then Plan B (Iran war) kicks in.

SheepDog-One's picture

Dump in more dollars...big deal. The problem isnt a LACK of money, its that money is now worthless. 

While everyone is mesmerized  by futures, we're at world war.

mayhem_korner's picture



Yes. Financial sector effectively experiencing hyperinflation.  Trickle-down will accelerate in 1H 2012.

Leopold B. Scotch's picture

How we measure wealth is readying to shift from $'s to .oz's.  Simple 'nuff.

Au Bitchezzzzz.

Momauguin Joe's picture

Right now, it's being measured in Black Gold. Iranian Oil, bitchez!

vast-dom's picture

Yes and either way oil goes past $120 and further squeezes global markets in bihyperstagflation nightmare along with more downgrades.

maddogs's picture

 oil goes - But GS will make a killing via ICE.

LMAO's picture

Yep, better pile in to crude post-haste.

reboot this mofo's picture

Look, a WW3 with Iran is not going to be permitted by the international coalition which includes the Russians, Chinese and the Pentagon (and others). The elite will do anything to delay their collapse and the expected arrests & indictments of thousands of miscreants. 0% chance of WW3 from some that knows (and not talking about of his ass).

We are nearing the end for the banking cabal.

Popcorn anyone?

11b40's picture

Sounds good, but I think you are dreaming.

Odin's picture

I'd like to agree, however I fear they would rarther destroy us all then submit... These are, after all, some ruthless mother fuckers...

maddogs's picture

Syria first..it'll choke Iran supplies,,, then the Feces hits the orbiting surfaces of the rotary device.

Tsar Pointless's picture

...being ignored by 95% of the world population?

Yes, I agree. It's terrrr-i-ble. (Said in my best Cleveland Brown voice)

SheepleLOVEcheddarbaybiscuits's picture

Doesnt everyone see whats going on? yesterday consumer confidence soars, today adp employment soars, warmongering with iran, pakistan, today markets soar on interest rate manipulation. This is the EXACT same shit bush jr pulled to get reelected. This makes me sick.....

StychoKiller's picture

"The yellow jester does not play, but gently pulls the strings,

And smiles as the puppets dance, in the court of the Crimson King." -- King Crimson, "Court of the Crimson King"

xcehn's picture

When they throw in the kitchen sink and start bailing out aliens, you know the end is here.

GeneMarchbanks's picture

LOL. Escalation pure and simple. Cameron cannot get this iRan thing started fast enough.

Since everyone will soon forget about the complete clusterfuck that is/was MF Global, I'd just like to say one last time: Fuck Jon Corzine.

Zero Govt's picture

Cameron is merely following his hero, Tony Blair, and wanting to start his own false murderous expensive mindless war

i think it insures a $1m consultancy contract with Credit Suisse when he leaves office with country in even more of a mess than when he started.. it's a performance bonus

Ghordius's picture

Cameron is Just Following Orders, for criminy...

DrunkenMonkey's picture

So true. Did you see how soon after visiting with the US prez (and his henchmen) he was touting Turkey for EU membership (yet again) ?

This dispite the fact that all the major European leaders are quite happy to go on the record and say "there's not a chance in hell we will allow a(nother) US satrap into our club".


Irish66's picture

Isn't that how long it lasted when they did it for Lehman

DormRoom's picture

arrggh.. the ogligarchs  wil (have)l monetize!  high to hyper inflation for the 99.  Reward the speculators, and punish savers.


The West is headed straight into uncontrolled stagflation in 2012.  And Japan will go bust, because of central bank monetizing.


They must know, but don't care.  The hubris! 



DrunkenMonkey's picture

Interesting. So, Japan logically to go first, given their debt levels, but followed by whom ?

Tsar Pointless's picture


It also bought Bank of America a few more days.

Wait until next week. This will be a distant but painful memory.

And things will be much much worse than they are now.

Final bazooka has been utilized. Clear the way for the drones and warships.

SheepDog-One's picture

Funny how we're ALREADY at 'So, whats next'? Even Cramer just said it wont last but for a moment. 

stop.snitching's picture

Even Cramer said it might only last a week at best....

Zero Govt's picture

looks like the Germans put their foot down (on the brakes) in the ECB

you can always depend on Kamakazi Ben and Turbo Tim to hit the gas peddle ...the Thelma & Louise of futile suicidal economic morons

Sudden Debt's picture




Ghordius's picture

Lost pounds?
Pound? Lost?


Peter K's picture

What you/we all need to understand is that this is a short term fix. It allows banks to fund their USD exposure a littel cheaper. But at the end of the day, you still have a solvency problem  in the EU which this move does not address. Therefore, you need to keep your positions small, so as not to have margin issues. But the flip side of this coin is that when this puppy moves, you will get your bang for the buck. :)

Manthong's picture

Please make to sure to tell the algos that all is NOT well.

youngman's picture

it is long enough for TPTB to get in..or get out..whatever they needed to save themselves cash....in the meantime we the peons lose it...

lolmao500's picture

Good I hope they do that till inflation crushes everything. Silver and gold bitchez!

midgetrannyporn's picture

Steroid shots make a dying system feel and look better for awhile. That's all this is.

mayhem_korner's picture



Two minute offense down 4 TDs.  Should be fun.  :D

Tense INDIAN's picture

whatever it is ...the LONGs should book profits....::



TuborgGold's picture

Bad day to be short the euro...poor me

tradebot's picture

You haven't been paying attention

Scalaris's picture

A week is too optimistic, every word-powered floor since August's and September's market plunge, along with October's ramp, has seen its time span decreasing since "investors" became more desensitized and immune to unsubstantiated rhetoric. 

Risk will be sold into any ramps as even the robots know, that until the solvency matter is addressed, the current market is a minefield, despite the jubilant global bullshit.

yabs's picture

they catuallyjust made the situation way worse with oil zooming higher

this will kill the economy

Nemo01's picture

Anyone has an estimate of the liquidity (in usd) beeing flushed into the system?

machineh's picture

Get ready for a classic '9:45 a.m. flameout' in US stocks.

This is overdone.

yabs's picture

eurpopean stocks are now up almost 10 percent in 2 days


Snakeeyes's picture

Global Central Banks Go to Defcon 4 - "Fire up the printing presses, gang!" Or at Least Swaps


Look at Euro bond yields versus US yields. US yields actually ROSE.

SofaPapa's picture

For a novice non-specialist, could someone answer a question please?  How does a move like this compare with the anticipated "QE3" people keep sighting on the horizon?  Thanks in advance.

kralizec's picture

Bought a week to find real uinicorn farts, isn't that just fabulous....

Paradigm's picture

take what you can NOW

Paradigm's picture

take what you can NOW