At exactly 9 am, half an hour into Trichet's press conference, the world's most undercapitalized hedge fund: the European Central Bank, demonstratively came in and started buying Italian bonds in hopes the market will forget just how broke the European continent truly is. This is the third major intervention by a central bank in capital markets in the past 24 hours following the SNB and the BOJ. Next up the Fed, and everything going to hell. Because even as Italian bond yields drop below 6%, the selloff in Portugal bonds is accelerating and the 10 Year yield is now 15 bps wider at 11.34%. We have a question: at what point does the ECB have to officially start printing Euros before its capitalization goes negative?
Update: we spoke too soon. ECB now panic buying Portuguese bonds too: