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ECB Buys €3.7 Billion In Bonds Last Week, Total Now €207 Billion: All Eyes Turn To Tomorrow's Sterilization Procedure

Tyler Durden's picture




 

In a less than surprising turn of events, last week the ECB "only" bought €3.7 billion in peripheral bonds, which was to be expected considering the Fed announced the global FX liquidity swap rate cut on Wednesday morning providing a quite visible hand to push yields lower at least briefly, so in essence the ECB only had to keep the market up for half the required amount of time. Far more importantly, the total amount of bonds now carried on the ECB's books is €207 billion. This is important, because as readers will recall the ECB failed to sterilize an amount lower than this, or €203.5 billion, last week, with just €194.2 billion in bids submitted. Naturally, with the total cumulative amount increasing every single week, the likelihood of future sterilization failures only gets bigger and bigger. We will find out if the European banks parking a near record amount of cash with the ECB as of today, will result in a second failed sterilization in a row tomorrow and just how favorable the market will approaching this particular latest flashing red light around 7 am Eastern tomorrow.

 

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Mon, 12/05/2011 - 11:16 | 1946529 GeneMarchbanks
GeneMarchbanks's picture

Sterilization =

'A form of monetary action in which a central bank or federal reserve attempts to insulate itself from the foreign exchange market to counteract the effects of a changing monetary base. The sterilization process is used to manipulate the value of one domestic currency relative to another, and is initiated in the forex market.'

Inflationary.
Mon, 12/05/2011 - 11:18 | 1946552 Comay Mierda
Comay Mierda's picture

back up the truck on SPY puts while they are cheap

Mon, 12/05/2011 - 11:19 | 1946555 AngryGerman
AngryGerman's picture

"peripheral" - includes what countries now?

Mon, 12/05/2011 - 11:33 | 1946601 Nussi34
Nussi34's picture

France, Belgium, ...

Mon, 12/05/2011 - 11:22 | 1946562 thunderchief
thunderchief's picture

Silver up....!!!  32.742536... and...and...

Like a stiff dick in a cold wind....

Mon, 12/05/2011 - 11:22 | 1946564 MFL8240
MFL8240's picture

Anyone know where the money came from?

Mon, 12/05/2011 - 11:25 | 1946575 AngryGerman
AngryGerman's picture

ye seriouz? its a fuckign central bank, think again...

Mon, 12/05/2011 - 11:23 | 1946569 4shzl
4shzl's picture

Sterilize banksters, not currency.

Mon, 12/05/2011 - 11:55 | 1946701 HD
HD's picture

I assure you bankers have nothing to sterilize - not a one of them has any balls. If they didn't have the tax payer bailouts and the fed put they would be the homeless guys moving in with the OWS.

Mon, 12/05/2011 - 11:23 | 1946570 PulauHantu29
PulauHantu29's picture

print, buy, print, buy some more...and keep repeating.

Mon, 12/05/2011 - 11:57 | 1946691 cranky-old-geezer
cranky-old-geezer's picture

 

 

There's only two ways to keep the sovereign debt ponzi scheme going now:  Print currency or let interest rates rise.

Letting interest rates rise would attract existing money as investors seek higher yeilds.  But it drains money away from private credit markets, further depressing the economy.   Businesses can't borrow to fund expansion, hire empoyees, etc.

Printing money keeps rates down but debases the currency, robbing more wealth from people and further depressing the economy.

Some economists say printing currency to buy more sovereign debt allowing governments to do fiscal stimulus would help the economy.  But all the fiscal stimulus done so far hasn't helped any economy recover.  Not one bit.

Bottom line, trying to keep the sovereign debt ponzi scheme going is crushing the economy of every debtor nation.

Not that anyone cares.  Governments are openly and brazenly sacrificing their economies to keep their sovereign debt ponzi scheme going.

Mon, 12/05/2011 - 12:11 | 1946793 august west
august west's picture

 

exactly, we are at the keynesian end point.

as Kyle Bass notes:

"every dollar of incremental debt generated in the past 10 years has resulted in $.08 increase in real GDP."

keynesian sterility; credit bust virility

Mon, 12/05/2011 - 12:04 | 1946745 earleflorida
earleflorida's picture

here's where the money comes from - "the most powerful bank you never heard of" [dated material for zh's 3/06 - but, worth reiteration] -

http://www.escapeartist.com/Offshore/Articles/Bank/

queue,... mighty mouse, timmy from the 'holy cheese/sleaze factory'!

Mon, 12/05/2011 - 12:24 | 1946855 Stoploss
Stoploss's picture

Still have a rate imbalance, Look for a discount rate drop Thursday night, ahead of the upcoming eu summit failure.

Mon, 12/05/2011 - 12:45 | 1946917 Snakeeyes
Snakeeyes's picture

Ita;ly big winner, US big loser in Treasuries. Will led Big Ben to QE3!!!!!!

E1 Trillion Cash Infusion into Eurozone - Fed May Enter "Bailout Bonanza!" - Italy, Belgium, Spain and France Big Winners in Bond Market, US Biggest Loser

http://confoundedinterest.wordpress.com

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