So To Clarify: Dropped seniority and overseeing of ESM (unratified) and EFSF rescue funds (which will not be boosted in size) to fund not just Italy and Spain but Ireland too...conditioned on agreeing to EU banking oversight
UPDATE2: The Irish are all-in:
- *IRELAND'S KENNY SAYS WHAT WAS IMPOSSIBLE IS NOW POSSIBLE
- *IRELAND TO GET EQUAL TREATMENT WITH OTHERS, KENNY SAYS
UPDATE:
- *MONTI SAYS EURO LEADERS HAVE NO PLAN FOR BOOSTING BAILOUT FUNDS
- *ITALY HAS NO INTENTION TO `APPLY FOR THIS,' MONTI SAYS
Early morning (drunk-dialing/texting) headlines from the EU Summit that there has been some short-term measures approved in terms of the removal of the seniority preference for ESM/EFSF rescue fund recaps of Italian and Spanish banks (though no details of the levels of dilution, cram-downs, or amounts have been discussed). The market, being as thin as it can be, is ripping higher on this realistically 'not much' news - though clearly someone 'blinked' a little. Headlines via Bloomberg:
- *EURO LEADERS RENOUNCE SENIORITY ON SPAIN LOANS
- *EURO LEADERS AGREE TO OPEN FUNDS WITHOUT AUSTERITY PROGRAMS
- *BANKS CAN RECAPPED DIRECTLY WITH AID FUNDS, VAN ROMPUY SAYS
But it's not all free-money and unicorn tears:
- *MERKEL SAYS EU LEADERS TO CONTINUE WORK ON LONG-TERM MEASURES
- *JUNCKER SAYS WOULD HAVE `HOPED FOR MORE' FROM EU SUMMIT
- *EU BANK SUPERVISION IS CONDITION FOR ESM LOANS TO BANKS: RUTTE
We await news from Germany's 'governing bodies' on ESM ratification.
S&P 500 e-mini futures jumped 15pts or so on the news and EURUSD tore almost 200pips straight up. Both are leaking back notably as reality sinks in (but all those stops are gone now). Gold, Silver, Oil, and Copper all soaring higher as for now only 5Y Treasury yields are really moving higher.
EURUSD exuberance...to less than 1 week highs though...
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and ES back to 'pre-Spain bailout close' and 'post-Greek election open levels'...
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Charts: Bloomberg