Contrary to what some may have been expecting, there was no coordinated grand central-bank bailout announcement over the weekend (and likely won't be one for a while). Instead we got promises of plans for a master plan, even as Soros gave Europe 3 months [3](or 2 months and 29 days as of today). Still, that has not prevented European stocks from rising to intraday highs driven by the EUR, and fears of a major snap-back rally in the record oversold currency as explained here yesterday [4]. It also means that, as warned repeatedly, even the faintest hint of German capitulation will trigger buy programs. Such as this one just hitting the tape:
- MERKEL, BARROSO TO MAKE STATEMENTS AT 7 P.M. IN BERLIN
- EU SAYS BANKING UNION ON AGENDA FOR BARROSO-MERKEL MEETING
No clarification, nothing of substance: the mere suspense now is enough to make traders ignore that nothing is getting better. But at least for the time being nothing is (much) worse.
Expect Germany to promptly dash hopes that it is fixing anything. Remember XO = 1000 bps before anything real happens.