At today's meeting, the ECB left interest rates unchanged. The accompanying press release states:
“The Board of Governors does not see significant signs of tension in the money markets or lack of liquidity in the banking system.”
But despite the apparent calm, the ECB still announced a new refinancing program (#LTRO) to support liquidity in the money market. To avoid defaults, the ECB also softens capital adequacy requirements for commercial banks.
- In a published press release, the ECB is disingenuous, there is tension, and quite strong, it can be seen in the dynamics of major currency pairs.
- Funds and banks currently have serious budget holes, they have to sell off defensive assets (note the decline in #gold today).
- Investors simply pull their money out of #treasuries and gold to avoid margin calls.
The situation is becoming more and more interesting, theoretically, you can even earn money on it (for example, buy gold at the current failure), practically you can buy one bottom and get a couple more as a gift. Traders - people are not superstitious, but still, #13thFriday has a good chance of becoming a new storyline for a film about the financial crisis.