Market Snapshot: Flip Flop.... Update - And Plunge On Bond Purchases, IMF, Lehman Comments

Update 2: Draghi just killed IMF lending proposal - "lending money to IMF to buy Euro bonds is not compatible with the treaty" - EURUSD now in free fall.

Update: two additional comments, i) that the ECB is not the IMF, and that lending to the IMF would be very complex legally, and ii) that the liquidity situation is comparable to post Lehman have sent everything plunging to overnight lows. Lastly, Draghi just kicked the ball in Europe's court. This is about to get very ugly fast.


ES now well below pre-call levels and CONTEXT tracking lower too - risk-off, disappointment-on.

It was all going so well until Draghi dropped the coded 'less' bond purchases 'no bazooka' bomb-shell at which EURUSD, BTPs, European bank stocks, and ES all stalled instantly and started to revert to pre-Dragozel levels. BTPs are holding up the best for now, though almost entirely retraced, but a 1% up and down roundtrip in ES was enough for many to see the schizophrenic market at its best.

EURUSD 120pips off mid-speech highs.

European bank stocks surged (but remained well off yesterday's best levels) before reverting on Draghi's dose of reality.

BTPs almost entirely retraced but are doing the best so far as ES is now lower the pre-call levels. Sovereign spreads are at their wides of the day now as we note BTP spreads have risen 34bps from intrday tights.


Chart: Bloomberg